Forex (or FX) stands for Foreign Exchange, the global market where currencies are traded. In this market, exchanging one currency for another is called currency trading, which always occurs in pairs.
For example, if a trader wants to exchange Euros (EUR) for US dollars (USD), the currency pair he would trade would be the EURUSD. Trading currencies implies that a trader simultaneously buys one currency while selling another.
Various economic, political, and environmental factors contribute to the changing values of currencies, and forex traders buy and sell currencies in order to take advantage of these swings in value.
The forex market is a global, decentralised market, which has the highest volume of trading than any other market at $5 trillion per day, has no physical location or central exchange, and operates 24 hours a day, 5 days a week.
How can I make money from forex trading?
The idea is to predict how a currency pair's price will move, and open a position based on that prediction. You could profit from either a rise in price by going long or a fall in price by going short.
What about trading capital?
You can start trading on FXTM for as little as $200. You don’t need a huge deposit, as trading with leverage reduces the initial amount you need to open a position.
Note: Leverage depends on your knowledge and experience. It can increase both your profits and your losses.
Which currency pairs are traded most in forex?
The most popular currency pair is EUR/USD, followed by USD/JPY, GBP/USD, AUD/USD, USD/CHF, USD/CAD, and NZD/USD. These pairs are known as the 'majors.'
How is the exchange rate for a currency pair measured in forex?
The standard unit of measurement for change in value between currencies is the pip. It stands for 'point in price' or 'percentage in point'.
What are the main benefits of trading forex?
In the forex market, you can:
- Trade 24 hours a day, 5 days a week.
- Make your money go further with leverage.
- Capitalise on high liquidity and volatility.
- Trade at low cost.
