Forex Trading

Forex is the trading of different currency pairs.

The trading occurs between one currency against another. One currency is compared with the other. For example, the rate of the USDGBP currency pair is 0.66, then it means that 1 USA dollar costs 0.66 British Pounds. The goal of Forex is to see if the American dollar will enhance or not its price equated to the British Pound. If it does, then the trader should buy the USDGBP pair on this term.

In the case when the price goes down, for instance from 0.66 to 0.64, then the USA dollar has a descended position. If the price moves in the opposite way, for example from 0.66 to 0.69, then the USA dollar is increasing its price against the British Pound. You will meet often the terms “short” and “lot” where “long”, in that instance, correlate with the Dollar and “short” refers to the British Pound. Because the GBP stated its price in the USD. The other important expression that you must take into consideration is “the major”, which signify the ruling global currency pairs, such as the AUDUSD, the USDJPY, the EURUSD, the USDCAD, the USDCHF and the GBPUSD. And every one of them has the Dollar inside. We have the phrase “cross pairs” which refers to pairs that do not have the Dollar in them. Forex does not function as a real physical currency transaction. All transitions and swaps are going on the Internet, which means that this market works only as speculation with currencies. Approximate statistic says that more over 4 trillion dollars are being swapped every day all around the globe, but all the assets are engaged in many types – future, forward, currency exchange and so on.

The Forex trading works without breaks, during the whole week and 24 hours a day but it has holidays on weekends.

Look for additional Forex information at the Trade Solid Markets learning section.