New to Forex – Forex Beginner’s Guide

Forex is an abbreviation of Foreign Exchange. Like it pronounces Forex is the simultaneous buying and selling of a currency pair. Many currency pairs are available for trading (practically all) but traders rely most on some pairs which are called majors. These currencies are called majors because liquidity is major for these pairs and this means that you can sell or buy any of these pairs whenever you like because a lot of these money are in circulation worldwide.

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Forex is a physical occurrence in the global economic system. A tourist traveling from Europe to USA exchanges euros to dollars and becomes a potential trader of Forex. Usa companies need to exchange US dollars before exporting to Europe or Japan. Every currency pair has a price which is determined by the law of demand and supply globally. If the demand for a currency is high then it gains in value. If the supply for a currency is high then it loses in value. Today, Forex liquidity is more than 3 trillion dollars daily.

The most vital for a trader is the meaning of the value of a currency pair. For example EUR/USD 1.2640 means that you can buy 1.2640 USD with 1 EUR. Remember: An simple rule to remember what this price means is to translate the numerator (EUR) in 1 and take the currency value to be the denominator. Some currencies have special names like Kiwi for New Zealand Dollar, Cable for Fantastic Britain Pound and Aussie for Australian Dollar. If you become an active Forex trader you will listen these names often.

How can a trader make a profit from Foreign Exchange?

This is the most vital part to know, so take fantastic care to know it thoroughly before reading more. The value of a currency pair is not the same during the day but changes second by second all the week besides Saturday and Sunday when the banks are closed. You can buy or sell a currency pair. This means that you can buy or sell the first part of the pair and sell or buy the other simultaneously. For example let

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