Forex trading
2 min read
Fx trading
Forex also referred to as exchange or FX trading, is that the conversion of 1 currency into another. It is one of the most actively traded markets in the world, with an average daily trading volume of $5 trillion.
The FX market may be a global, decentralized market where the world’s currencies move. Exchange rates change by the second therefore the market is consistently in flux.
Only a small percentage of currency transactions happen within the “real economy” involving international trade and tourism.
Currency traders or speculators buy currencies and hope that they will be able to sell them at a higher price in the future.
In the forex market, currencies always trade pairs. When you exchange U.S. dollars for euros, there are two currencies involved, therefore the exchange always shows the worth of 1 currency relative to the opposite. The EUR/USD price, for instance, allows you to skill many U.S. dollars (USD) it takes to shop for one euro (EUR).
The forex market uses symbols to designate specific currency pairs. The euro is symbolized by EUR, the U.S. dollar is USD, so the euro/U.S. dollar pair is shown as EUR/USD. Other commonly traded currency symbols include AUD (Australian dollar), GBP (British pound), CHF (Swiss franc), CAD (Canadian dollar), NZD (New Zealand dollar), and JPY (Japanese yen).2
Each forex pair will have a market value related to it. The price refers to what proportion of the second currency it takes to shop for one unit of the primary currency. If the worth of the EUR/USD currency pair is 1.3635, this suggests that it costs 1.3635 U.S. dollars to buy one euro.
