How to Trade Forex

All currencies in forex trading are quoted in pairs, one against another. Their names are given as a three letter abbreviation known as ISO code, where the first two letters represent the country and the third one is the name of the currency.

Depending on how commonly they are traded, currencies can be divided into three categories:

The most traded ones are usually referred as to majors and include the US dollar, the euro, the Great Britain pound, the Japanese yen, the Canadian dollar, the Swiss franc, the Australian dollar and the New Zealand dollar. Major pairs involve the US dollar and another currency from the list above, for example: EURUSD, USDJPY, USDCHF

Cross pairs comprise of two major currencies neither of which is the USD dollar, for example: EURGBP, EURCHF, EURJPY, GBPCAD, GBPAUD and CHFJPY.

Exotic pairs consist of a major currency and another less traded one, for instance EURTRY, USDSEK, USDDKK, USDHDK, USDSDG. Exotics tend to be less liquid and to have less tight spreads.

Currency rate always represents the value of the base (first) currency expressed in the quote (second) currency. In Forex there are two prices given - Bid and Ask- the former shows how much of the quote currency is required to sell 1 unit of the base currency and the later represents how much will be required to buy it. Ask price is higher than bid. The difference between two prices is referred as to spread, which is usually measured in pips or points.

Leverage, Volume, Required Margin

All currencies in forex trading are quoted in pairs, one against another. Their names are given as a three letter abbreviation known as ISO code, where the first two letters represent the country and the third one is the name of the currency.

Depending on how commonly they are traded, currencies can be divided into three categories:

The most traded ones are usually referred as to majors and include the US dollar, the euro, the Great Britain pound, the Japanese yen, the Canadian dollar, the Swiss franc, the Australian dollar and the New Zealand dollar. Major pairs involve the US dollar and another currency from the list above, for example: EURUSD, USDJPY, USDCHF

Cross pairs comprise of two major currencies neither of which is the USD dollar, for example: EURGBP, EURCHF, EURJPY, GBPCAD, GBPAUD and CHFJPY.

Exotic pairs consist of a major currency and another less traded one, for instance EURTRY, USDSEK, USDDKK, USDHDK, USDSDG. Exotics tend to be less liquid and to have less tight spreads.

Currency rate always represents the value of the base (first) currency expressed in the quote (second) currency. In Forex there are two prices given - Bid and Ask- the former shows how much of the quote currency is required to sell 1 unit of the base currency and the later represents how much will be required to buy it. Ask price is higher than bid. The difference between two prices is referred as to spread, which is usually measured in pips or points.