/How Does Forex Works
How Does Forex Works 2017-12-21T17:43:31+00:00

click here How Does Forex Works?

  • Forex trading is the simultaneous buying of one currency and selling of another.
  • These two currencies constitute the so-called “currency pair”.
  • Each currency is represented by three letters and the currency is always in pairs.
  • The first two letters represent the country name and the third letter represents the currency.
  • Forex pairs are read in the opposite direction of mathematical proportions or ratios.
  • Example : EUR/USD = 1.18000.
  • The currency on the left of the slash (/) is called the base currency (Euro) and the currency on the right is called the quote currency (U.S. Dollar).
  • This notation means that 1 unit of the base currency 1 Euro is equal to 1.18000 of U.S Dollars.
  • Which mean you have to pay 1.18000 U.S Dollars to buy 1 Euro.
  • If selling, the foreign exchange rate specified how much units of the quote currency you get for selling one unit of the base currency.
  • In the example above, when you sold 1 euro, you will get  $1.18000 in U.S. dollars.

When To Buy Currency?

  • If traders think that the value of a particular base currency will increase, they will open buy positions.

When To Sell Currency?

  • If traders think that the value of a particular base currency will decrease, they will open sell positions.
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