Currencies that are traded against one another are called currency pairs. Currency pairs are made up of a base currency and a counter currency. The base currency is the one on the left and the one on the right is the counter currency.
Foreign exchange is based trading one currency for another in order to increase potential when the value of the traded currencies goes higher against their peers.
There are multiple factors that determine the value of currencies like economics, natural disasters, and political events. A trader’s aim is to gain from the rise and fall of a currency brought on by the factors mentioned above.
The forex market is where currencies are traded. There is a constant need to trade currencies in the world today in order to make foreign trades which is why foreign exchange is very important. The forex market has become the largest and most liquid financial market in the whole world with a daily trading volume estimated at 5 trillion U.S. dollars – much higher than the stock market.
In the past, the major participants in the forex market were mainly central banks, corporations, big financial institutions and individuals of significant wealth.
However, with the availability of the internet, the forex market has lowered its barrier of entry to regular people who can now take part in this ever growing financial arena.
FXBFI Broker Financial Invest Ltd, trading as 101investing, is not permitted to provide regulated financial services to residents of the United Kingdom.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85% of retail investor accounts lose money when trading CFDs.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.