What is forex?
Forex (Foreign Exchange) is the market where currencies are traded. It operates 24 hours a day, 5 days a week, with over $6 trillion traded daily. Traders buy one currency and sell another always in pairs (e.g. EUR/USD, USD/JPY).
Forex (Foreign Exchange) is the market where currencies are traded. It operates 24 hours a day, 5 days a week, with over $6 trillion traded daily. Traders buy one currency and sell another always in pairs (e.g. EUR/USD, USD/JPY).
Forex trading is the process of exchanging one currency for another. In every Forex trade, currencies are traded in pairs meaning you buy one currency while selling another at the same time.
Each currency is represented by a three letter code. The first two letters indicate the country or region, and the third letter represents the currency itself.
For example, USD stands for the US Dollar and JPY stands for the Japanese Yen. In the USD/JPY pair, you are buying the US Dollar while selling the Japanese Yen. To make Forex markets easier to understand, currency pairs are grouped into categories based on how frequently they are traded.
These are the most actively traded currency pairs and account for around 80% of global Forex trading. Examples include EUR/USD, USD/JPY, GBP/USD, and USD/CHF.
EUR/USD – Euro vs US Dollar
GBP/USD – British Pound vs US Dollar
USD/JPY – US Dollar vs Japanese Yen
USD/CHF – US Dollar vs Swiss Franc
USD/CAD – US Dollar vs Canadian Dollar
AUD/USD – Australian Dollar vs US Dollar
Minor pairs are traded less frequently and usually involve major currencies without the US Dollar. Examples include GBP/CAD, EUR/CHF, and GBP/JPY.
Exotic pairs combine a major currency with one from a smaller or emerging economy. Examples include USD/MXN, EUR/ZAR, and GBP/SGD.
These pairs are grouped by geographic regions such as Scandinavia or Australasia. Examples include EUR/NOK, AUD/NZD, and AUD/SGD.