WHAT IS FOREX?

What You’ll Learn

You’ll learn:

• What Forex means
• How currencies are traded
• What currency pairs are
• What base and quote currencies are

What Does Forex Mean?

Forex stands for Foreign Exchange.

It is the global marketplace where currencies are exchanged.

Unlike buying a physical product, Forex trading involves one currency relative to another.

This is why currencies are displayed as pairs.

For example:

GBP/USD

This means British Pound versus US Dollar.

Currency Pairs

When you see GBP/USD, there are two currencies.

The first is the base currency.

The second is the quote currency.

So:

GBP = Base currency

USD = Quote currency

If GBP/USD is trading at 1.3000, this means one British Pound is worth approximately 1.30 US Dollars.

Major Currency Pairs

Major pairs typically involve the US Dollar and another major currency.

Examples include:

• EUR/USD
• GBP/USD
• USD/JPY
• USD/CHF
• AUD/USD
• USD/CAD
• NZD/USD

These are among the most heavily traded currency pairs.

What Makes Forex Different?

Forex is a global market.

Trading activity occurs across major financial centres, including London, New York, Tokyo and Sydney.

This means Forex is available across much of the week, although specific trading hours and liquidity vary.

Key Takeaways

• Forex means Foreign Exchange.
• Currencies are traded in pairs.
• The first currency is the base currency.
• The second currency is the quote currency.
• GBP/USD compares the British Pound with the US Dollar.