Forex or Foreign Exchange , Quite simply, it's a Global Market that allows you to trade two Currencies against each other . For example : If you ever traveled to another country, you usually have to find a Currency Exchange Booth at the airport, and then exchange the money you have in your wallet into the currency of the country you are visiting. You go up to the exchange counter and you notice a screen displaying different exchange rates for different currencies. You find United States Dollar (USD) and you notice that if you wanna get a Dollar you must have at least 75 Rupees. That means the value of USD in India is above 75 Rupees. Then you Exchange the Currency for another and you automatically participated in the Forex Market !
What traded in Forex Market?
The simple answer is Money. Because you are not buying anything physical, Forex trading is confusing to beginners so we'll use a simple (but imperfect) analogy to help explain.
Think of buying a currency as buying a share in a particular Country, kinda buying a share in a Company. The price of currency is usually a direct reflection of the market's opinion on the current and future health of its respective Economy.
In Forex Trading, when you buy, say, the US Dollar, you are basically buying a "Share" in the US Economy. Think in future US Economy goes well and the price of "Share" you bought got more value. Now, Once you sell the "Shares" back to the market, hopefully you'll end up with a Profit.
In general, the exchange rate of a currency vs other currency is a reflection of the condition of the country's economy, compared to the other country's economy.
As we learnt in the previous lesson, Forex Trading is Buying or Selling of different Currency Pairs.
Now, what is Currency Pairs ?
Currency Pairs are basically a pair of two currencies those you are using to trade in Forex Market. (Example : USD/AUD = US Dollar vs Australian Dollar)
⇒ Click Here to *learn more about Currency Pairs*
Major Currencies :
There are lots of Currencies in allover the world to trade, you probably start trading with the "Major Currencies".
Now, there are 8 Major Currencies :
They are called "Major Currencies" because they're most heavily traded currencies and represent some of the world's largest economies.
All of the above currencies are shown as Symbols. Now Currency Symbols always have three letters, where the first two letters identify the name of the Country and the third letter identifies that country;s currency (usually the first letter of the currency's name).
These three letters are known as ISO 4217 Currency Codes.
By 1973, the International Organization for Standardization (ISO) established the three-letter codes for currencies that we use today.
Take NZD for instance....
Here, "NZ" stands for New Zealand, while "D" stands for Dollar.
Below, I listed all of the eight Major Currencies by their symbol/code, country where they're used, currency name and cool Nicknames (sometimes they're called by their nicknames also).
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Nicely written and much imformative in just simple way
ReplyDeletethank you so much for your reply sir
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