What is Forex Trading?

Forex or currency market is the market in which currencies are traded. In the simplest case, a currency transaction can be, for example, when you exchange your local currency for another for an upcoming vacation.

The data of the Bank for International Payments show that in 2019 the daily turnover of the entire Forex market reached approximately 6.6 trillion dollars per day, which is a serious increase compared to 5.1 trillion three years ago.

The US dollar maintains its position as the dominant currency after being a party to 88% of all transactions. The share of euro transactions rose slightly to 32%, while transactions involving the Japanese yen fell by as much as 5% in the last three years to 17% of all transactions.

Currencies are traded in pairs , and the movement of currency pairs measures the value of one currency against another. For example, the most traded currency pair EUR / USD measures the value of the single European currency - the euro, against the US dollar. It is also the most traded currency pair in the world.

Currency pairs

Currency pairs that are traded on the Forex market are divided into primary, secondary and exotic. The main currency pairs are made up of the most commonly traded currencies, which are: * USD - US dollar * EUR - EUR * JPY - Japanese Yen * GBP - British pound * CAD - Canadian dollar * CHF - Swiss Franc * AUD - Australian dollar * NZD - New Zealand Dollar

Major currency pairs are those that contain one of these currencies in combination with the US dollar, such as EUR / USD, USD / JPY and GBP / USD. Minor currency pairs are those that include major currencies but do not include the US dollar.

These are pairs like EURGBP, EURCHF, AUDNZD and others. These are often called currency crosses.

Finally, exotic currency pairs are those in which at least one currency is not one of the above and contains currencies such as the Swedish krona (SEK), the Hong Kong dollar (HKD) and the South African rand (ZAR).