What's traded in Forex?
The straightforward answer is MONEY.
as a result of you’re not shopping for something physical, Forex mercantilism are usually confusing thus we’ll use a simple (but imperfect) analogy to help explain.
think about buying a currency as buying a share throughout a selected country, rather like buying shares during a company.
the value of the currency is usually an on the spot reflection of the market’s opinion on this and future health of its various economy.
In Forex trading, once you buy, say, the U.S. Dollar, you're essentially shopping for a “share” at intervals the US economy.
you're sporting that the US economy is doing well, and may even recover as time goes.
Once you sell those “shares” back to the market, hopefully, you'll end up with a profit.
In general, the speed of exchange of a currency versus alternative currencies is also a mirrored image of the condition of that country’s economy, compared to other countries’ economies.
Major Currencies
whereas there are doubtless several currencies you'll trade, as a replacement forex trader, you'll probably begin mercantilism with the “major currencies“.
They’re referred to as “major currencies” as a result of they’re the foremost heavily listed currencies and represent variety of the world’s largest economies.
Forex traders disagree on what they contemplate as “major currencies”.
The edgy ones who probably got straight A’s and followed all the principles as youngsters solely consider USD, EUR, JPY, GBP, and CHF as major currencies.
Then they label AUD, NZD, and CAD as “commodity currencies“.
For us rebels, and to remain things simple, we have a tendency to simply contemplate all eight currencies as a result of the “majors”.
Below, we list them by their symbol, country wherever they’re used, currency name, and funky nicknames.
Currency symbols continuously have 3 letters, wherever the first 2 letters establish the name of the country and thus the third letter identifies the name of that country’s currency, sometimes the primary letter of the currency’s name.
These three letters are stated as ISO 4217 Currency Codes.
By 1973, the globe organization for Standardization (ISO) established the three-letter codes for currencies that we have a tendency to use today.
Take USD for instance…
U.S. stands for us , whereas D stands for dollar.
simple enough, right?
The currencies enclosed at intervals the chart higher than are referred to as the “majors” as a result of they're the foremost wide listed ones.
