Forex market is just one of the names of the international foreign exchange market (also referred to as the “foreign exchange market” or “foreign exchange market”). Simply put, FOREX is a market where you can exchange one currency for another at a fixed price. It is the largest and most liquid market in the world. Its daily turnover is more than $5 trillion.The main traders in the Forex market include banks and other large financial institutions but we can all indirectly participate in Forex trading, but the extremely high volatility and liquidity have made it a very attractive place for traders from all over the world to invest and speculate. For this reason, about 90% of transactions currently carried out in the Forex market are speculative in nature.
How was the Forex market established? History of the currency market: The currency exchange market did not exist in its current form, that is, as the Forex market that we know today until the twentieth century. For centuries, gold, silver and other raw materials have been used as a means of payment internationally around the world instead of currencies.
In the 19th century when European countries decided that the value of their currencies should be measured in gold and agreed to purchase these currencies, if necessary (the gold standard). This allowed traders to freely convert national currencies into gold (and vice versa), which contributed to the improvement and development of international trade. Currently, currency volatility is taken for granted but during the gold peg period currency conversion rates into gold remained stable and in line with the parity set by central banks.
But the main currencies are available on all platforms:
- Major currencies in Forex trading
- S. dollar.
- Sterling pound.
- Japanese Yen.
- Swiss franc.
- Canadian dollar.
- Australian dollar.
An introduction to the most important terms in the Forex market in the US dollar
The US dollar is the main measure of the value of all foreign currencies, and from this we conclude that the main pairs are the US dollar against the major currencies. The major pairs and their symbols in foreign currency trading. The major pairs are the pairs that contain a dollar at one end:
- Euro Dollar (EUR USD)
- Sterling – Dollar (GBP USD)
- Dollar-franc (USD CHF)
- Dollar – Yen (USD JPY)
- Canadian Dollar (USD CAD)
- Australian Dollar (AUD USD)
- New Zealand Dollar (NZD USD)
You do not need to memorize these pairs. Just understand that every pair that contains the dollar is major and therefore it will have a large trading and movement rate, and you will find a lot of analysis on it, and thus you know that the dollar follows the currencies and with its movement all currencies move. If the currency pair is:. The first currency is the base and is bought and sold against the second.
Example: EUR/USD pair. If we open a buy deal, we will have bought the first currency (the euro) in exchange for the second (the dollar), meaning we paid a dollar to buy the euro. However, if we made a sale deal on this pair,
Example: You analyzed or heard the analyzes and opinions of analysts, and the expectations were that the dollar would rise, and at the same time the euro and the Japanese yen would fall, and you want to open deals;
- First, on EUR USD, here you open a sell deal. This means that you sell the euro and buy a dollar.
- The second on USD JPY Here you open a buy deal, which means you buy dollars and sell yen.
An introduction to the most important terms in the Forex market and how to trade it
What is a pip in Forex: It is the smallest arithmetic unit that is changed through which the price movement can be calculated accurately, and some of them call it (Santi). The movement of the fourth number after the comma in the major pairs is the movement of the pip.
Except for the yen pairs, the movement of the second number after the comma is the movement of the point because the value of the yen is relatively low compared to the rest of the world currencies. Example:
- The GBP/USD pair is currently priced at 1.4987
- We call the movement of the fourth number after the comma (7) the point
- That is, when the price becomes 1.4988, we say that the price has risen by one point.
The process of calculating the pip value: The pip is related to the size of the deal and the structure of the pair. It is best to see my article on risk management for a better and easier explanation, because here I will mention it quickly. You can also download the point price indicator for free and add it to the MetaTrader platform. The point price is calculated in US dollars because most accounts opened in trading companies are in US dollars. To calculate the value of a pip in US dollars1. Transaction size.
- The exchange rate of the pair.
- The price of one point.
What is the spread in trading? Spread: It is the price difference (or point difference) between the selling price and the buying price. This difference is calculated for the benefit of the intermediary company that we deal with, and it varies from one company to another. That is, when opening any deal, whether a sale deal or a buy deal, this difference is deducted directly
An introduction to the most important terms in the Forex market for beginners
What is the best trading platform: The MetaTrader 4 or 5 platform is considered one of the best types of platforms due to its many features, which are:
- Free and without any charge.
- Easy to work on.
- It works on all types of computers in addition to
- Mobile phones.
- The presence of tools that help you draw and analyze
- You can upload any indicator you want to use.
What is Forex terminology? For beginners…these are the most important trading terms on the stock market
- “Ask price”…
- “Bearish” trend…
- “Ask/Buy Price” (Bid price)…
- “Booked Orders”…
- “Call Option Contract”…
- “Candlestick”…
- “Close position”…
- “Complete Fill”
What basic trading terms should you know? Currency pair, cross pairs, base currency, quote currency, sell price, ask price, spread – lot and contract size – pip and pip, pip size and pip value – margin and leverage – balance, cash flow and free margin – profit and loss
