Forex is just an acronym of foreign exchange, Forex is the Largest market in the world with a Total Daily Liquidity [turn over] of $5.3 Trillion dollars.
While the Crypto market, for those of us who know about Bitcoins has a Total Market cap of just $238.7 Billion as of Today, this is not even the Daily Volume, it shows the massive Liquidity of the Forex Market.
How do you make money from the Forex Market
We make money from the constant fluctuations in the market. We buy when price is low and sell when the price is High. Currency pairs are been traded on forex.
Note: This price fluctuation happens every single seconds on the forex chart thereby giving you a marketable value for your money every single time you place a trade or enter.
What are currency pairs?
Currency pairs are the national currencies from two countries coupled for trading on the foreign exchange (FX) market. In the forex market, you deal with two currencies at a time. For example, when you’re selling US dollars, you need to know what you’re selling it for.
E.g: Let’s say you’re selling dollars and wants to get euros in return. In that case, you will be trading the USD/EUR currency pair.
There are three types of currency pairs:
- Major currency pairs
- Minor currency pairs
- Exotic currency pairs
Major currency pairs consist of the most frequently traded currencies globally. Because they have massive liquidity, you’re able to trade them virtually always. Furthermore, you’ll find the lowest spreads or brokerage costs when trading these pairs.
Major currency pairs include :EUR/USD – Euro/US dollarUSD/JPY – US dollar/Japanese yenGBP/USD – British pound/US dollarUSD/CHF – US dollar/Swiss francUSD/CAD – US dollar/Canadian dollarAUD/USD – Australian dollar/US dollarNZD/USD – New Zealand dollar/US dollar.
Minor currency pairs is when a currency pair doesn’t include the US dollar, it’s called a minor currency pair.
Below are examples of Minor Currency pairs :EUR/GBP — Euro/British poundEUR/AUD — Euro/Australian dollarGBP/JPY — British pound/Japanese yenCHF/JPY — Swiss franc/Japanese yenNZD/JPY — New Zealand dollar/Japanese yenGBP/CAD — British pound/Canadian dollar.
Base and quote currency
In Forex trading, the first currency in the currency pairs is called the Base Currency while the second in the currency pairs is called the Quote Currency. For example, In EUR/USD pair, EUR comes first which makes it the Base while USD comes second which makes it the Quote Currency.
In Forex market, knowing all these basic knowledge is sinequanon to successful trading.
Becoming a successful Forex trader requires dedication as this can and surely will change your life forever.