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What is Forex?

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Forex is the shortened version of Foreign exchange and it is where traders from around the world go to buy and sell currencies. Whilst the idea of buying and selling currencies might sound strange at first the actual execution is quite simple. The reason for this is because all it entails is the ‘buying’ or ‘selling’ of currency A against currency B. There are plenty more videos about this subject coming up to ensure that you understand this fully, so don’t worry. For now let’s discuss the basics.

In terms of size, the Forex market is by far the world’s biggest trading environment with over $5 trillion traded per day. The reason for its size is the market’s participants. These are international banks, hedge funds, central banks and other financial institutions. These participants have very big trading budgets. Small players such as us have much smaller budgets compared to these large participants so we do not have the ability to move the market into a particular direction.

Currencies and pairs available

There are many currencies available to trade in the Forex market but there are a few ‘major’ pairs that we should bear in mind in the first instance. They are:

  • USD – US Dollar
  • EUR – the Euro
  • GBP – Great British Pound
  • JPY – Japanese Yen
  • CHF – Swiss Franc
  • AUD – Australian Dollar
  • CAD – Canadian Dollar

With this in mind, we have also compiled a list of the five top most traded currency pairs. They are:

  • EUR/USD
  • GBP/USD
  • USD/CAD
  • USD/CHF
  • AUD/USD

The reason why these currencies are called ‘majors’ is because they provide most trading volume on a daily basis. 

There are many other currency pairs available but these are the top five most traded in terms of volume. This is why at the start of your training; you should always consider using these charts as they will provide the most volatile market conditions.

 

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