What is Forex – Chapter 1 | Learn Forex

The forex market is the largest growing financial market with the highest liquidity. The term forex indicates “foreign and currency”. It also sometimes abbreviated as “FX”. Forex is another name of the currency market.

Forex trading is a short form of foreign exchange trading which represents the market in which one country’s currency is quoted against that of another country’s currency. Therefore provides the basis for the exchange of one currency with another, or to agree on a rate for any future purchase.

Country A Country B Currency Pair
Australia USA AUD/USD
Germany USA EUR/USD
England USA GBP/USD
USA Japan USD/JPY
Germany Australia EUR/AUD

While traveling to different countries, you need to exchange your own currency into that country’s main currency, in order to continue traveling, shopping, etc.

Suppose you are traveling to Australia from the United State, then you need to buy the Australian dollar with your US dollar.

Australian dollar gets quotes as AUD/USD against the US dollar. If AUDUSD’s current rate is 0.7656. That means if you convert $5000 US dollar to the Australian dollar, you will get $5000*0.7656 = 3828 AUD Dollar which you can spend in Australia.

This AUDUSD is a forex pair. Similarly, in the above table illustration, you will see the currency pair of GBPUSD. British pound gets quoted against US Dollar. In this case, if you travel to the UK, you need to convert the US dollar to pound sterlings.

It is not necessary that people convert currencies only during traveling. Currency conversion happens for all the global business deals, even if you need to buy a new mattress from China living in Cyprus. Then you will need to convert your Euro into Chinese Yuan (EUR/CYN). This way, forex currency exchange is mandatory or should we say the main lifeline for all international business transactions.

Forex Major Currencies:

Followings are the major forex currencies in this world:

Symbol

Flag

Country

Currency Name

Nickname

USD United States of America US Dollar Buck
EUR The European Union Euro Fiber
GBP Great Britain / England / United Kingdom British Pound / Pound sterling Cable,quad
JPY Japan Japanese Yen Yen
CHF Switzerland Swiss Franc Swissy
CAD Canada Canadian Dollar Loonie
AUD Australia Australian Dollar Aussie
NZD New Zealand New Zealand dollar Kiwi
SEK Sweden Swedish krona krona
NOK Norway, Quisling regime Norwegian krone krone

All these ten currencies are part of the G10 currencies, are the most heavily traded currencies in the world. The majority of the forex traders buy & sell these currencies on a daily basis. Thus it has the highest liquidity. The term “G” came from the G-10 countries and their agreement to participate in the IMF General Arrangements to Borrow.

(Reference Wikipedia)

Daily Forex Market Volume:

Just because forex transaction is essential for global business. Thus the forex market has a bigger trading volume than other trading exchanges. Bigger than Newyork Stock Exchange (NYSE), Tokyo Stock Exchange & London Stock Exchange.

Daily average currency trading volume is around $5.1 trillion as of 2017. It is increasing day by day. Because global business is improving day by day with better connectivity, online bank transaction, money transfer from one country to another.

For that reason, more forex transaction is getting executed per seconds or even in nanoseconds with lightning-fast speed modern technology.


Foreign Exchange average trading volume
Foreign Exchange average trading volume

Because of the bigger daily average trading volume, this market holds lots of opportunity for traders, especially for day traders or scalpers (reference chapter 2)

There are almost thousands of forex trading brokers available for investors to invest in the currency market. Big banks have their currency brokerage division also. Thus the forex market is the most liquid one.

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Forex Broker Regulation – Chapter 3 | Learn Forex

The forex market is a cross-border transactional business involving clients all over the world. Regulation is mandatory for the common interest of the traders & government business policies. This Regulation gets enforced on the brokers so that brokers can not cheat its traders or investors & partners. Forex brokers usually get regulated or licensed from […]

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Make Profit – Chapter 11 | Learn Forex

Stop Loss Stoploss is the price at which trade will get closed if the market moves against the open position. Suppose if a trader buys EURUSD from 1.2050, then he can place a stop loss to 1.2030 below the buy price. So whether if the market falls below his buy price, the trade will close […]

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What is Pip – Chapter 7 | Learn Forex

What is a pip in forex? Pip is the profit loss counting scale or unit in forex. The measurement of profit loss gets counted in forex in terms of pip or pipette. For example, if EUR/USD quotes 1.1350 and market value increased to 1.1351, then the change pf 0.0001 means 1 pip. The value of […]

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