Forex trading, also known as foreign exchange trading, is buying and selling currencies in the global market. The forex market is the largest financial market in the world, with an average daily trading volume of over $5 trillion. In this guide, we will go over the basics of forex trading, including the forex market, how it works, and the major currencies traded in the market.
What is the Forex Market?
The forex market, also known as the foreign exchange market, is a decentralized market where currencies are traded. The market is open 24 hours a day, five days a week, and is accessible to anyone with an internet connection. The forex market is the largest financial market in the world, with an average daily trading volume of over $5 trillion.
How Does Forex Trading Work?
Forex trading is done through a broker or a market maker. When you trade forex, you are buying one currency and selling another. The value of one currency is determined by its exchange rate with another currency. For example, if the exchange rate for the US dollar (USD) is 1.25 against the euro (EUR), then one dollar is worth 1.25 euros. If you believe that the dollar’s value will increase against the euro, you can buy dollars and sell euros.
The Major Currencies Traded in the Forex Market
Many different currencies are traded in the forex market, but the most commonly traded currencies are the US dollar, the euro, the Japanese yen, the British pound, and the Swiss franc. These currencies are known as the “major currencies” and are considered the market’s most stable and liquid currencies.
Forex trading can be a great way to make money and diversify your portfolio. However, it’s essential to understand the basics of the market, including what it is, how it works, and the major currencies traded in the market. With the right knowledge and strategy, anyone can start trading in the forex market. It would be best if you do your research and only invest what you can afford to lose.