Forex includes the trading of foreign currencies

 

the trading of foreign currencies

It is the largest financial market in the world and has an approximated daily turnover of 2 or more trillion dollars

This turnover is larger than the stock market

Currencies are always exchanged in pairs. A regular pair would be EUR/USD (Euro over US dollars

The first currency is the starting. The next currency is the reverse currency

The pair can be seen, as the sum of the second currency that is required to buy 1 unit of the first currency

If you were to purchase the above pair you would purchase Euro and at that time promoting US dollars

If the pair were offered the opposite would happen you would promote the Euro and buy the US dollar

This might sound complicated but simply think of the pair as one object and you are purchasing or promoting one item

If you think the Euro will go up versus the US dollar you buy the EUR/USD pair

If you think the EUR will lower against the US dollar you sell the EUR/USD pair

When you see forex rates you will see two numbers

If we use the EUR/USD as an example you might see 1.2360/1.2365 , the first number 1.2360 is the estimate price

and is the price traders or dealers are ready to purchase Euros vs. the US dollar

The second number 1.2365 is the offer price and is the price traders are ready to promote the EURO versus the US dollar

The difference between the bid or quote and the provide price is the called the spread

The spread for the huge currencies is usually 3 to 5 pips

The most popular increment of currencies is the pip. If the EUR/USD goes from 1.2360 to 1.2361 that is considered the only one pip

A pip is the last decimal point of estimate. Most currencies estimated to 4 decimal points

The different is the Yen, which is estimated to 2 decimal points eg 139.41

The word pip is just forex vocabulary so if a forex trader says the EURO has gone up 20 pips versus the US dollar add 20 points to decimal part of EUR/USD pair

Forex is usually traded in {lots|quite a lot} also {{referred|related}|called} to as contracts

The regular size for a whole lot is $100,000. In the last a small number of a mini lot size of 10,000 dollars has been released and this has become growing popular

Forex trading is leveraged with most forex brokers offering 1% margins. This means you can control one regular whole lot of $100000 with $1000

Generally you would require a minium of $2500 to open atypical size Forex account

 

May I ask... what was the point of this?