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What is Forex Trading?

The act of buying one currency while selling another is known as forex trading.

A currency pair is formed by the combination of these two currencies. Currency pairings are always exchanged, and each pair’s currency is denoted by a three-letter code.

The nation is represented by the first two letters in the code, and the currency is represented by the third letter, as in JPY = Japanese Yen.

The value of one currency in terms of another is expressed by forex prices, which are referred to as rates.

For example, a euro-dollar price or rate may be expressed as:

1.23700 EUR/USD

The base currency (in this case, the euro) is to the left of the slash, and the quote currency (in this case, the dollar) is to the right (in this example, the US dollar).

Currency pairings are presented without the slash (/) on MT4 and MT5 for traders using one of our free MetaTrader platforms, so you’ll see pairs expressed as EURUSD rather than EUR/USD.

Looking at the currency notation above, we can see that one unit of the base currency (1 euro) equals 1.23700 US dollars, implying that you’ll have to spend 1.23700 US dollars to acquire one euro.

When is the best time to buy?

If a trader believes the value of a base currency will rise, he or she will establish a purchase or long position.

When should I put my house on the market?

If a trader believes the value of a base currency will fall, he or she will open a sell or short position.

When is it possible to swap currencies?

The currency market is unusual among financial markets throughout the world in that it is available for trade 24 hours a day, five days a week.