What Is Forex?
Forex, short for foreign exchange, is the global market where currencies are exchanged against one another. When you trade Forex, you buy one currency while simultaneously selling another. A quote such as EUR/USD 1.1000 means one euro is valued at 1.1000 U.S. dollars.
Currency Pairs
The first currency is the base currency and the second is the quote currency. Major pairs such as EUR/USD, GBP/USD and USD/JPY are widely traded because they generally offer strong liquidity.
Pips, Lots and Spreads
A pip is a commonly used unit for measuring small price changes. A lot describes position size, while the spread is the difference between the bid and ask price. Understanding these terms helps you calculate trading costs and potential results.
Leverage and Margin
Leverage allows you to control a larger position with less capital. Margin is the amount of funds required to open and maintain a leveraged position. Leverage can increase both potential gains and potential losses, so it should always be used with sensible position sizing.
What Moves Currency Prices?
Interest rates, inflation, employment, economic growth, central-bank policy, geopolitical events and market sentiment can all influence exchange rates.
Final Thoughts
Strong Forex foundations make it easier to understand charts, economic news and trading platforms. Learn the basics, practise on a demo account and develop risk-management rules before risking real money.
Risk warning: Forex trading involves significant risk, and leveraged trading can magnify losses.