Forex Trading

Forex trading involves seven of the most traded currencies available worldwide. "Lots" refers to currencies that are traded in dollar amounts. The exchange rate is $1,000 equal-to-one-lot that controls $100,000 in currency. This system is known as "margin". One trader can control $100,000 of currency for the amount of $1,000. This is called "High Leverage".

In Forex Trading one trades their currencies in pairs. This will express what currencies they trade for, and each pair has a separate notation.

Here is the list of the most common symbols used in forex trading:

USD - US Dollar EUR - European currency Union called "EURO" GBP - Currency from the British Pound JPN - Japanese Yen CHF - currency from the Swiss Franc AUD - Australian Dollar CAD - Canadian Dollar

Different countries have their own symbol of currency to serve as their country's identification. There are always two countries involved in trading - no country can trade by itself. Two different currencies are needed to compare trading. One currency is traded with another currency.

Here is a list of the most common pairs for trading:

EUR/USD: Euro/US Dollar, called "Euro" USD/JPY: US Dollar/Japanese Yen, called "Dollar Yen" GBP/USD: British Pound/US Dollar, called "Cable" USD/CAD: US Dollar/Canadian Dollar, called "Dollar Canada" AUD/USD: Australian Dollar/US Dollar, called "Aussie Dollar" USD/CHF: US Dollar/Swiss Franc, called "Swissy" EUR/JPY: Euro/Japanese Yen, called "Euro Yen"

You may notice that the form given above is like a fraction. The 'numerator', located at the left of the fraction, is the base currency. The 'denominator', located at the right, is the counter currency. To place an order in Forex trading you should be careful on what to put on the right/left side of the form. Take for example, you will buy USD/GBP. This would mean you are actually buying USD and you are selling the GBP. These two currencies together are your "pair".

You must learn the base/counter currency to familiarize yourself with dealing in Forex transactions. Knowing this about forex trading will make it easier for you if you want to make a transaction. Using Forex trading you can exchange money in all directions, and in all currencies you need.