What forex is
Forex is exchanging one currency for another. You buy euros with dollars and gain if the euro appreciates.
What forex is — what it is?
Forex is the over-the-counter currency exchange market. There is no single exchange here: trades go through a network of banks and brokers, so quotes from different providers can differ by a fraction of a pip.
You don't trade a currency on its own, you trade pairs. In EUR/USD the first currency is the base, the second is the quote: the price shows how many dollars one euro costs. Buying the pair, you buy euros and sell dollars at the same time.
The market runs around the clock five days a week, handing over from the Asian session to London and then New York. How active a session is has a strong effect on volatility and on the spread.
What forex is — how it is built?
One of the four pairs in the app is EUR/USD, the most liquid in the world. Its structure is cleaner than the rest, so it's easier to learn on: fewer random spikes and a tighter spread.
What forex is — common mistakes
Trading during low-liquidity hours. At night the spread is wider and moves are more often false.
Forgetting that a forex position is always two currencies at once. A dollar headline moves every dollar pair simultaneously.
Ignoring the swap when you hold a position overnight: over a long run it adds up.
Related to
Glossary
- forex
- the over-the-counter currency exchange market.
- exchange
- a venue for trading cryptocurrencies.
- pip
- the minimum price step in a currency pair. For most pairs it is the fourth decimal place, for yen pairs the second.
- quote
- the current price of an instrument.
- volatility
- how far price swings over a period. High volatility means big moves in both directions.
- spread
- the difference between bid and ask. Your cost of entering a trade.