Forex: What do you know about it?

Currency trading, also called forex (or FX) or foreign exchange, is a method of comparing two currencies. Taking USD GBP as an example, the rate is 0.66, which means that 1 US Dollar (USD) costs 0.66 British Pound (GBP).

Taking part in Forex means checking whether the American dollar increases in value when compared to the GBP.

In the event of a price drop (for instance: from 0.66 to 0.64), the USD is in a descending position. The USD’s price against the GBP increases if the price moves higher (for example, from 0.66 to 0.69).

Often you will hear the terms “long” and “short”: In this case, “long” refers to the USD, and “short” refers to the GBP, because it stated its price in USD.

The term “the major” refers to the dominant global currency pairs, such as the AUDUSD, the USDJPY, the EURUSD, the USDCAD, the USDCHF, and the GBPUSD. They are all different currencies based on the Dollar. Cross-currency pairs are currencies that are not based on dollars.

Foreign exchange does not function as a real transaction involving physical currency. The entire process of transition and swapping takes place over the Internet. Only speculation with currencies is possible on this market. Globally there are approximately 4 trillion dollars traded each day, however, the assets are traded in many different ways: futures, forwards, currency exchange, and so on.

During the work week, forex trading is continuously active, but on weekends it takes a break.