03 Oct

What is Forex and Trade?

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What is Forex?

A foreign exchange market is simplified as the Forex market. Also, known as Fx market, spot market and currency market. The markets in which participants are able to exchange and speculate on currencies. If you have ever traveled to a different country, you always had to search out a currency exchange booth at the landing field, and then exchange the money you have got it into the currency of the country you’re visiting.

You go up to the counter and spot a screen displaying different exchange rates for various currencies. You find “Japanese yen” and assume for yourself, my sixty Rupees are valuing one hundred yen?! Then we tend to exchange our cash rupees into Japan Yen as much of you required.

When you do that, you’ve got primarily participated within the Forex market! You’ve got changed one currency for another. Assuming you’re an Indian visiting Japan, you’ve got sold-out Indian Rupees and purchased yen.

Before you fly back home, you stop by the currency exchange booth to exchange the yen that you simply miraculously have left over (Tokyo is expensive!) and watch the exchange rates have modified.

It’s these changes within the exchange rates FOREIGN EXCHANGE MARKET daily average trading volume 5.3 trillion dollars, always Forex rocks our socks. The largest stock market in our world is the NYSE (New York stock exchange). New York stock exchange (NYSE) market average trading volume per day 22.4 billion dollar, second biggest stock exchange is the Tokyo stock exchange, third biggest stock exchange market is the London stock exchange market and also Indian stock exchange market is 10th place in our world. Tokyo stock exchange market average trading volume per day is 18.9 billion dollar, London stock exchange market average trading volume per day is 7.2 billion dollar and Indian stock exchange market average trading volume per day is the Forex market is more than 200 times bigger than world biggest (NYSE) stock exchange market.

What is trade?

Money is what traded, it involves in buying and selling of one currency against some other currency, but you are not buying anything physical all process done by virtually.

If you think of buying a Europe currency Euro means Europeans zone economy will go up, it means you are betting that the European economy is doing well. If you think of selling a European currency Euro means Europeans zone economy will fall down, it means you are betting that the European economy is falling down.

Major currencies based on strength 

  • EUR= Euro (Fiber)
  • GBP= Great Britain Pound (Cable)
  • AUD=Australian Dollar (Aussie)
  • NZD= New Zealand Dollar (Kiwi)
  • USD= United States Dollar (Bucks/ Greenback)
  • CAD= Canadian Dollar (Loonie)
  • CHF= Swiss Franc (Swissy)
  • JPY=  Japanese Yen   

Currency symbol always have here letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency. For example USD means first two letters stance for United States third letter stance for the dollar.

For Instance, USD/JPY=101.80 means a value of 1 US dollar equals to 101.80 Japanese Yen also USD/INR = 60 means a value of 1 US dollar equals to 60 Indian rupees.

Currencies traded in Pairs?

Always trades are done in pairs, in Forex trading when you buy one currency at the same time you selling another country’s currency. For example you are going to one shop and purchasing one pen (purchasing of one pen this mean buying function) simultaneous you give your money to shop keeper (Giving money to shop keeper means you are selling your money).

When you trade in the fx market, you buy or sell in currency pairs

Major currency pairs based on most frequently traded:

  • EUR/USD = European Euro vs United State Dollar
  • USD/JPY = United State Dollar vs Japanese Yen
  • GBP/USD = Great Britain Pound vs United States Dollar
  • USD/CHF = United States Dollar vs Swiss Franc
  • USD/CAD = United States Dollar vs Canadian Dollar
  • AUD/USD = Australian Dollar vs United
  • NZD/USD = New Zealand Dollar vs United States Dollar 

A safe haven currency could be a currency that investors and traders believe is stable enough to stay its worth compared to alternative currencies in times of economic uncertainty, inflation and alternative styles of crisis. Generally, refuge currencies square measure from countries that have terribly stable economies, therefore the currency doesn't change much in value. The U.S. dollar (USD), Japanese yen (JPY) and Swiss franc (CHF) are usually considered to be safe haven currencies.

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Risk warning: Trading foreign exchange (Forex Trading) and contracts for differences (CFDs) on margin carries a high level of risk, and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. Please ensure you fully understand the risk involved before trading, and if necessary seek independent advice.

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