What is Forex?

Forex, short for Foreign Exchange, is the global marketplace where traders buy and sell currencies. It is the largest and most liquid financial market in the world, with a daily trading volume exceeding $6 trillion. Unlike the stock market, the forex market operates 24 hours a day, 5 days a week, making it accessible to traders across all time zones.

In forex, currencies are traded in pairs — you are always buying one currency and selling another at the same time.

Why Do People Trade Forex?

Forex attracts millions of traders worldwide because of its unique advantages:

• High Liquidity: Enter and exit trades with ease, even with large volumes.

• Global Accessibility: Trade from anywhere with just an internet connection.

• Leverage Opportunities: Control larger positions with smaller capital.

• Two-Way Trading: Profit from both rising and falling markets.

• Low Transaction Costs: Spreads and commissions are relatively low compared to other markets.

Understanding Currency Pairs

In forex, currencies are quoted in pairs, showing the value of one currency against another.

A currency pair is written in the format BASE/QUOTE:

• Base Currency: The first currency in the pair.

• Quote Currency: The second currency in the pair.

Example: EUR/USD = 1.1000 means 1 Euro = 1.10 US Dollars.

When you buy EUR/USD, you’re buying Euros and selling US Dollars.
When you sell EUR/USD, you’re selling Euros and buying US Dollars.

Types of Currency Pairs

Major Currency Pairs

• EUR/USD – Euro / US Dollar

• GBP/USD – British Pound / US Dollar

• USD/JPY – US Dollar / Japanese Yen

• USD/CHF – US Dollar / Swiss Franc

• USD/CAD – US Dollar / Canadian Dollar

• AUD/USD – Australian Dollar / US Dollar

• NZD/USD – New Zealand Dollar / US Dollar

Minor Currency Pairs

• EUR/GBP – Euro / British Pound

• GBP/JPY – British Pound / Japanese Yen

• AUD/NZD – Australian Dollar / New Zealand Dollar

Exotic Currency Pairs

• USD/TRY – US Dollar / Turkish Lira

• USD/SEK – US Dollar / Swedish Krona

• EUR/ZAR – Euro / South African Rand

Metals

Precious metals are traded like currency pairs, quoted against the US Dollar:

• XAU/USD – Gold / US Dollar

• XAG/USD – Silver / US Dollar

• XPT/USD – Platinum / US Dollar

• XPD/USD – Palladium / US Dollar

Indices

Stock market indices track the performance of groups of major companies:

• US30 – Dow Jones Industrial Average (30 major US companies)

• US100 – Nasdaq 100 (Top 100 non-financial companies in the US)

• US500 – S&P 500 (500 large-cap US companies)

• DE40 – DAX 40 (Germany’s top 40 companies)

• UK100 – FTSE 100 (UK’s top 100 companies)

• JP225 – Nikkei 225 (Top companies in Japan)