So within the method, you attend that counter and noticed a DIP screen displaying totally different currency charge per unit.then you discover that Japanese yen and suppose yourself that I would like dollar equals one hundred yen. therefore you’ve got ten USD in your pocket.so you’ll suppose that I will be the richest person if I convert it to yen.when you try this you’ve got basically participated within the Forex market as a result of you exchange one currency for another.
Before you fly back home, you stopped by their currency exchange booth to exchange the yen that you just miraculously have left and see that the charge per unit has modified. These changes in the exchange rate that allows you to make money in the foreign exchange market. So the foreign exchange market which is usually known as Forex or FX which is the world’s largest financial market now on, but when we think about the market we always think that NYSE is the biggest market which is New York stock exchange which traded 23 billion dollars each day, but if you consider about the Forex market it’s traded over 5 trillion dollars per day.
The Six Majors Currencies:
GBPUSD
EURUSD
USDJPY
USDCHF
AUDUSD
USDCAD
Currency Pairs:
A currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency.
Currency Values:
The value of money is determined by the demand for it, just like the value of goods and services. There are three ways to measure the value of the dollar. The first is how much the dollar will buy in foreign currencies. That's what the exchange rate measures. The value of money is determined by the demand for it, just like the value of goods and services. There are three ways to measure the value of the dollar. The first is how much the dollar will buy in foreign currencies. That's what the exchange rate measures.
Lots:
In the past, spot forex was only traded in specific amounts called lots, or basically the number of currency units you will buy or sell.
The standard size for a lot is 100,000 units of currency, and now, there are also mini micro and nano lot sizes that are 10,000, 1,000, and 100 units.
Pip Values:
The pip value is defined by the currency pair being traded, the size of the trade, and the exchange rate of the currency pair. To calculate pip value, divide one pip (usually 0.0001) by the current market value of the forex pair.
Buy & Sell:
The aim of forex trading is simple. Just like any other form of speculation, you want to buy a currency at one price and sell it at a higher price (or sell a currency at one price and buy it at a lower price) in order to make a profit.
The ask (sell price) for the currency pair represents how much you will get in the quote currency for selling one unit of the base currency. Unlike the stock or commodity market, you trade currencies, which means you're selling one currency to buy another.
Spread:
In finance, a spread trade (also known as relative value trade) is the simultaneous purchase of one security and sale of a related security, called legs, as a unit. Spread trades are usually executed with options or futures contracts as the legs, but other securities are sometimes used.