What is currency trading? - Regal Core Markets

 

According to a study published by Regal Core Markets, “Forex or Foreign Exchange (FX) refers to a type of trading that occurs across different currencies and markets. Compared to other types of financial exchanges, Forex is deemed to be the most stable because it has the busiest traffic with an estimated total of more or less $4 trillion daily transactions. It is also considered the most liquid since Forex utilizes no centralized governing body with transfers occurring through brokers, banks, financial institutions, and dealers.”

Forex trading is all about the buying and selling of currencies in pairs. Traders must have information about how much the currencies are worth to one another. This relationship is what defines a currency pair. A currency pair quotes two currency abbreviations, followed by the base currency’s value, which is based on the currency counter.

According to Investopedia, “currency pairs compare the value of one currency to another — the base currency (or the first one) versus the second or the quote currency. It indicates how much of the quote currency is needed to purchase one unit of the base currency. Currencies are identified by an ISO currency code, or the three-letter alphabetic code they are associated with on the international market. So, for the US dollar, the ISO code would be USD.”

For example, a EURUSD 1.67 means that one Euro is worth US$1.67.The base currency is Euro (EUR) and the counterpart currency is the US dollar.

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