what is forex exchange?

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forex trading is the act of buying and selling currencies

This is the world’s largest financial market with a daily turnover of $5 trillion and it involves many people – and many currencies.

Exchange rates change all the time

Let’s say you travel abroad and you go to an exchange and use $500 to buy euros.

the exchange rate changed. This is a profit of 5 dollars, which you made by trading currencies.

There are many types of currencies that you can invest in with iFOREX – in fact

The most traded currency pairs are called ‘majors’ and they compose about 85% of the entire foreign exchange market.

Exotic currency pairs are made up of one major currency and a currency of an emerging economy.

Here you’ll find forex explained in simple terms. If you’re new to forex trading, we’ll take you through the basics of forex pricing and placing your first forex trades.

‘Forex’ is short for foreign exchange, also known as FX or the currency market. It is the world’s largest form of exchange, trading around $4 trillion every day, and it is open to major institutions and individual investors alike.

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 higher price (or sell a currency at one price and buy it at a lower price) in order to make a profit.

The foreign exchange market is the "place" where currencies are traded

Some confusion can arise as the price of one currency is always, of course, determined in another currency. For instance, the price of one British pound could be measured as, say, two US dollars, if the exchange rate between GBP and USD is 2 exactly.

In forex trading terms this value for the British pound would be represented as a price of 2.0000 for the forex pair GBP/USD. Currencies are grouped into pairs to show the exchange rate between the two currencies; in other words, the price of the first currency in the second currency.

Currencies are important to most people around the world

Some commonly traded forex pairs (known as ‘major’ pairs) are EUR/USD, USD/JPY and EUR/GBP, but it is also possible to trade many minor currencies (also known as ‘exotics’) such as the Mexican peso (MXN), the Polish zloty (PLN) or the Norwegian krone (NOK

whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business.

As these currencies are not so frequently traded the market is less liquid and so the trading spread may be wider.

This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros.

When buying, the spread always reflects the price for buying the first currency of the forex pair with the second. So an offer price of 1.3000 for EUR/USD means that it will cost you $1.30 to buy €1.

You would buy if you think that the price of the euro against the dollar is going to rise, that is, if you think you will later be able to sell your €1 for more than $1.30.

The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world.

hen selling, the spread gives you the price for selling the first currency for the second. So a bid price of 1.3000 for EUR/USD means that you can sell €1 for $1.30