What is Forex?
Forex, short for foreign exchange, is the global market where currencies are exchanged.
When you trade Forex, you are buying one currency while simultaneously selling another.
Understanding currency pairs
Currencies are quoted in pairs. The first currency is called the base currency, while the second is called the quote currency.
For example, in EUR/USD, EUR is the base currency and USD is the quote currency.
- EUR/USD — Euro against the US dollar
- GBP/USD — British pound against the US dollar
- USD/JPY — US dollar against the Japanese yen
- AUD/USD — Australian dollar against the US dollar
Reading a currency price
If EUR/USD is quoted at 1.1000, it means one euro is worth approximately 1.1000 US dollars.
If the price rises, the euro is strengthening relative to the US dollar. If the price falls, the euro is weakening relative to the US dollar.
Learning reminder
This lesson is for educational purposes. Always understand the risks before using real money in financial markets.