The Forex market is traded worldwide by millions of individuals and organizations. It is the largest and most popular market in the financial world.
The table below shows global foreign exchange activity. From April 2007, the U.S. dollar is the most traded currency, being on either side of 86.3% of all transactions. The euro’s share is second at 37%, while the yen is at 16.5%. Yes, we know that only three of them already exceeded 100%. Remember that currency is traded in currency pairs, and the rates published by the bank survey a total of 200%. Still, one can see that the three main currencies traded in the market take up a lot!
The 7 most popular currencies (in order of popularity, or trading volume), along with their symbols are shown below:
| Symbol | Country | Currency |
| USD | United States | Dollar |
| EUR | Euro members | Euro |
| JPY | Japan | Yen |
| GBP | Great Britain | Pound |
| CHF | Switzerland | Franc |
| AUD | Australia | Dollar |
| CAD | Canada | Dollar |
As already mentioned, the currency is simply the buying and selling currencies. A transaction in the currency market is very similar to those found in other markets including the stock market, and especially the futures market. When trading in the forex market, you exchange one currency for another and how changes in prices, the purchase willl increase (or decrease) in value.
The first thing to understand is that FOREX trading means that traded currency pairs. You are buying one currency while selling another currency. Above we show you the seven most popular currencies traded in the market and refers to the pairs trading. These are the 7 most commonly traded pairs in the Forex market:
The reason that these are the most commonly traded pairs is simple. Only coins economic / political development and the liquid is required in sufficient quantities. The good news is that even with only these seven pairs, you can find more than enough potentially profitable operations to make a financial success.
Reading a foreign exchange budget is very simple if you remember two things:
As the centerpiece of the Forex market, the U.S. dollar is usually considered the base currency for quotes. When the base currency is USD, think of the quote as saying that what a U.S. dollar is a value in another currency.
When USD is the base currency and the price goes up, which means USD has strengthened in value and the currency has weakened. The increase in average prices of U.S. dollar can now buy more of the other currency than before.
The three exceptions to this rule are the British pound (GBP), Australian dollar (AUD) and the Euro (EUR). For these couples, in USD is the base currency, a budget increase means that the U.S. dollar is weakening and buys less of the other currency than before.
In other words, if a currency quote goes up, the base currency is getting stronger. A lower quote means the base currency is weakening.
Currency pairs that do not include all the coins are called USD cross, but the premise is the same.
Because they are traded in pairs, and because they are both buying and selling of one currency for another, it is important to understand the trading system. Brokers have a graph showing the current stock price, which may show something like this:
EUR / USD 1.5536
Is the current exchange rate of a couple who have experience if you have ever traveled to another country. The first coin on the left is called the base currency (in this example, the dollar euro), while the second right is called the counter currency (in this example, the U.S. dollar) .
When buying, the exchange rate tells you how much you pay in units of the quote currency to buy one unit of base currency. In the above example, you have to pay U.S. $ 1.5536 euro to buy $ 1.
When selling, the exchange rate tells how many units of the quote currency you get for the sale of a unit of base currency. In the example above, you will receive U.S. $ 1.5536 to sell 1 Euro Dollar.
If you buy EUR / USD this simply means that you are buying the Euro and at the same time selling the U.S. Dollar. If you sell EUR / USD, this means you are selling the euro at the same time buying the U.S. dollar.
I was going to buy the pair if you believe the base currency appreciates (rises) in relation to the counter currency. You could sell the pair if you think the base currency will depreciate (go down) relative to the counter currency.
Sometimes it can be difficult to understand this concept because of the dual pricing structure in the Forex market. For all purposes, generally be considered the couple as a single entity, such as stocks or futures, and buy or sell based on whether they think the price of the pair will go up or down.
When you buy a pair, you are expecting the price to go up to make a profit. This is also known as “going long” or enter a “long position.” When you sell a pair, you are expecting the price to drop to make a profit. This is also known as “going short” or enter a “short position”. We will explain more on this a little later.