Learning About Forex

By | September 6, 2015

As with many of the financial markets, forex is laden with technical jargon but once you become comfortable with some of the terms you will realise how genuinely accessible the biggest of all the financial markets is – doubly so due to online forex trading.
A simple internet search will throw up a host of sites with superb educational facilities often in the form of videos. They will take you through the initial premise of what online forex actually is, all the way through to expert knowledge should you so desire.
To simplify, currencies are traded in pairs. There are seven major pairs which are as follows: EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD, and NZD/USD. You can see that most of the pairs involve the largest trading currency, the US Dollar.
The first currency is named the ‘Base Currency’ and always has a value of one. The second currency is the ‘Counter Currency’ and fluctuates according to the market. If the counter currency rises it signifies that the base currency is strengthening and could indicate a good time to sell.
At the end of the currency quote you will see a detailed figure, for example EUR/USD 1.4001. The fourth digit after the decimal point is a ‘Pip’. If the figure changed 1.4001 to 1.4003 the value of your Dollar would have increased by 2 pips. You calculate the value of your earnings via your pips and most online forex trading accounts will work out the monetary gains on your behalf.
Many factors can influence a currency fluctuation with the most simple being supply and demand. If speculators rush to sell, say, Euros, there’ll be more Euros in the forex market and so the price will devalue. Speculation and confidence can greatly affect market values illustrated most recently in the banking crisis. Exports, foreign investment and central banks are all key players.
Online forex is an opportunity to get involved in the grand world of the financial markets and because forex has no centralised marketplace you can trade day and night from your home.
More information on the Foreign exchange market (forex).

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