Forex Trading Education
FOREX Basics
"Forex" stands for foreign
exchange; it is also known as FX. It is the buying and
selling of currencies. Unlike stocks or futures, there is no
centralized exchange for Forex. All transactions happen via
phone or electronic network. Because of this, Forex is among the
most liquid of trading instruments. In fact, the daily trading
volume of currencies is $ 3.2 Trillion – which is more than all
other world market exchange trading combined!
More than 85% of Forex trading volume occurs in the “Major” currencies:
US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian
Dollar and Australian Dollar.
In a Forex transaction, currencies trade in pairs. Therefore, a trader
buys one currency while simultaneously selling its pair. That is, a
trader exchanges the sold currency for the one being bought. So when a
trader trades Euro-US Dollar (EUR/USD), the trader is actually
exchanging the Euro for the US Dollar or vice versa. And when a trader
trades US Dollar / Japanese Yen (USD/JPY), the trader is actually
exchanging the US Dollars for Japanese Yen or vice versa.
The chart below displays some major and minor currency pairs and their
associated trading terminology.
|
Symbol |
|
Currency Pair |
|
Trading Terminology |
|
GBPUSD |
|
British Pound / US Dollar |
|
"Cable" |
|
EURUSD |
|
Euro / US Dollar |
|
"Euro" |
|
USDJPY |
|
US Dollar / Japanese Yen |
|
"Dollar Yen" |
|
USDCHF |
|
US Dollar / Swiss Franc |
|
"Dollar Swiss", or "Swissy" |
|
USDCAD |
|
US Dollar / Canadian Dollar |
|
"Dollar Canada" |
|
AUDUSD |
|
Australian Dollar / US Dollar |
|
"Aussie Dollar" |
|
EURGBP |
|
Euro / British Pound |
|
"Euro Sterling" |
|
EURJPY |
|
Euro / Japanese Yen |
|
"Euro Yen" |
|
EURCHF |
|
Euro / Swiss Franc |
|
"Euro Swiss" |
|
GBPCHF |
|
British Pound / Swiss Franc |
|
"Sterling Swiss" |
|
GBPJPY |
|
British Pound / Japanese Yen |
|
"Sterling Yen" |
|
CHFJPY |
|
Swiss Franc / Japanese Yen |
|
"Swiss Yen" |
|
NZDUSD |
|
New Zealand Dollar / US Dollar |
|
"New Zealand Dollar" or "Kiwi" |
|
USDZAR |
|
US Dollar / South African Rand |
|
"Dollar Zar" or "South African Rand" |
|
GLDUSD |
|
Spot Gold |
|
"Gold" |
|
SLVUSD |
|
Spot Silver |
|
"Silver" |
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