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Trade forex tutorial is an introduction to forex trading in an easy to learn forex tips. In the course of this article cum tutorial, we are going to concentrate on introduction to currency trade, some things everyone should know about the forex market.

DEFINITION OF FOREX

Foreign exchange is an over the counter market where currencies are traded for the other. It is considered the largest and most liquid market in the world. (A market is said to be liquid if there are a large number of buyers and sellers).  Foreign exchange is also referred to as FX or forex for short.

SECURITIES AND FOREX TRADERS

Majorly, currencies are traded in the forex market, but other securities can be sold there too. Most of the trades (if not all) are carried out over the internet, and involves central banks, currency speculators, large banks, multinational corporations, government, and a lot more. These are the major traders in forex market while retail traders are considered a small fraction of the market. On a daily basis, the forex market average trade worldwide is about $3 trillion.

SECURITY IN FOREX TRADING

A security is defined as a financial instrument that represents a trader’s position in the forex market. The major security sold in the forex market is currencies. Currencies are traded in pairs, and in carrying out a trade, there is an exchange of one of the paired currency for more of its “partner”. Currency pairs can be divided into the following three categories; the majors, the minors, and the exotic currency pairs.

THE MAJOR CURRENCY PAIR

These are the most common of all currency pairs and they contain the USD. There are seven of them, they are:

PAIR

CONTRIES

EUR/USD

Euro Zone/United States

USD/JPY

United States/Japan

GBP/USD

United Kingdom/United States

USD/CHF

United States/Switzerland

AUD/USD

Australia/United States

USD/CAD

United States/Canada

 

MINOR CURRENCY PAIRS

Currency pairs that fall under this category (a.k.a cross-currency) are currency pairs that do not contain dollars. They include:

PAIR

COUNTRIES

EUR/GBP

Euro Zone/United Kingdom

EUR/CHF

Euro Zone/Switzerland

EUR/CAD

Euro Zone/Canada

EUR/NZD

Euro Zone/New Zealand

EUR/AUD

Euro Zone/Australia

GBP/JPY

United Kingdom/Japan

CHF/JPY

Switzerland/Japan

CAD/JPY

Canada/Japan

AUD/JPY

Australia/Japan

NZD/JPY

New Zealand/Japan

GBP/AUD

United Kingdom/Australia

GBP/CHF

United Kingdom/Switzerland

 

EXOTIC CURRENCY PAIRS

These are currency pairs of a stronger but smaller currency combined with the USD. It can also be the case of an emerging currency combined with USD. They include:

PAIR

COUNTRIES

USD/SEK

US Dollar/Swedish Krona

USD/NOK

US Dollar/Norwegian Krone

USD/DKK

US Dollar/Danish Krone

EUR/TRY

Euro/Turkish Lira

USD/ZAR

US Dollar/South African Rand

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