What Is Forex 1.1

Lesson One

One who would want to go into trading must have heard of Forex (Foreign Exchange) and will demand to know what Forex is.

What is Forex?

To a lay man, Forex is a global market that allows one to trade two currencies against each other. There's more to the definition than just exchanging currencies, because there are terms one must understand in order to be on the safe side.

Foreign Exchanging occurs in the Global Market, and is otherwise called the Foreign Exchange Market, (FX Market) which is the largest financial market in The world. It is a decentralized market where the world's currencies are exchanged and profits and losses are made based on the exchange rate at that moment.

Case Study

A Nigerian whose about to travel to the United States visited the currency exchange booth at the airport, and then exchanged the money he had in his wallet into the currency of the United States, The USD.

He takes a look upwards an saw a digital board displaying an exchange rate for diverse currencies, There he would realize that 1 USD is exchanged at 388 NGN at Bid price and 400 NGN at Ask price. Once the exchange occurs he has just participated in the Forex Market.

Traded

Traded is a term in Forex that represents Money.

In Forex, when you buy an asset, let's the the USD, you just but a share in the United States Economy, that shows certainty that the USD is doing well or would do even better in the nearest future. You make profits once the Exchange rate becomes higher compared to the currency you traded for it.

Exchange Rate

Generally, the exchange rate of a currency versus other currencies is a reflection of the condition of that country’s economy, compared to other countries’ economies.

The Major Currencies In Forex

Forex is all about exchanging currencies, so one would be exposed to thousands of currencies on the Foreign Exchange Market but as a beginner, there are currencies called the Major Currencies.

These are currencies like the Canadian Dollars (CAD), United States Dollars (USD), Great Britain Pounds (GPD), European Euro (EUR), Swiss Franc (CHF), Australian Dollar (AUD), Japanese Yen (JPY), New Zealand Dollar (NZD).

These currencies are called the Major Currencies because because they’re the most heavily traded currencies and represent some of the world’s largest economies.