FOREX

The foreign exchange market – also known as Forex – is a financial market that allows traders to exchange currencies in order to gain profit. Every day, over $6 trillion worth of currencies are traded across the world, dwarfing the stock market.

Forex involves the buying and selling of currencies. This is why traders buy or sell a currency pair.

To make a profit in Forex, traders need to assess whether a Forex pair is likely to increase or decrease in price over a given time frame. For example, if a trader believes the price of EURUSD (the euro/dollar pairs) will increase, they should buy the pair at the current price and then sell the pair when that price increases to a desired level. Conversely, if a trader thinks the price of EURUSD will decrease in the future, they should sell the pair – and then buy it when the price decreases to a desired level.

Due to a daily turnover of trillions of dollars, Forex is the most liquid financial market that is open 24/5. There is always a buyer when you want to sell, and there is always a seller when you want to buy.

This advantage allows traders to gain profit at any time of a day, and since the Forex market works over-the-counter (OTC), this gives traders flexibility of trading from anywhere in the world. Traders can use a mobile phone or laptop for conducting analysis and placing trades.

The foreign exchange market determines the relative values – also known as the exchange rate – of the world’s currencies.

The price of a currency is a reflection of what the market thinks about the current condition of a country’s economy (compared to other economies).

The world’s most common currencies are called majors. Here is the list of them:

• USD (USA Dollar)
• EUR (Euro)
• JPY (Japanese Yen)
• GBP (Great British Pound)
• CHF (Swiss Franc)
• CAD (Canadian Dollar)
• AUD (Australian Dollar)
• NZD (New Zealand Dollar)