Most Commonly Asked Questions About Forex
What is Forex Trading?
Forex trading or Currency Trading is the Best Trading Platform In India which is the largest and liquid financial market in the globe. In trading forex, the currency is currency pair which is on floating exchange USD and AUD for example. Forex trading works as exchanging between two currencies.
Most financial institutes use forex trading to make bids on one currency to increase their hedge position in the trading market. The mechanism of forex trading is to buy one currency you have to pay in another currency.
What are Forex Currency Pairs?
Currency pair is simply two combined currencies of two countries for foreign exchange market. These two currencies have their own currency exchange rate and position size. These are base currency and quote currency.
In simple words, the currencies paired represents which currency you want to buy the base currency and what is the cost of that currency in the native coins the quote currency. All trading in best forex brokers in india takes place in currency pairs.
How do Currency Pairs Work?
Currency pair is 2 different country currency combined as base and quote currency. Currency in 1st is the base currency and 2nd is the quote currency. When you buy base currency pay the price for base currency in quote currency value. The exchange rate of foreign currency keeps fluctuating based on its changing values. Values of one currency will always be stronger than others.
Base Currency: The base currency is the 1st currency of the pair that you buy.
Quote Currency: The quote currency is the 2nd currency of the pair that you pay in amount to buy the base coin.In EUR/USD EUR is the base currency and USD is the quote currency. To buy EUR coin you have to pay the amount in USD. To buy 1 EUR coin you have to pay $1.35 USD currency.
What is Forex Commission?
Forex is not like best forex brokers in india that gain profit from doing trade for you, they are most likely dealers. They act as a counterparty for the investors to assume the market risk; they make a profit from the bids you ask not by charging a commission for the trade. Investors can ask/bid they cannot buy or sell as this is the case in an exchange-based market. Price is clear there will be no additional fees added. The profit completely belongs to the investors.
What is a Pip?
Pip is referred to as percentage in point. That represents the smallest incremental move gained at the exchange rate. This means price is quoted to the fourth decimal point in the FX market.
if exchange rate is 1.3920 and it is increased to one decimal point then exchange rate would be 1.3921. Exception applies to Japanese YEN coins because 1$ is worth 100yen. USD is paired with YEN the decimal point is moved to two points.
How Many Currency Pairs are There?
These are the Major Pairs:
EUR/USD (euro/dollar)
USD/JPY (dollar/Japanese yen)
GBP/USD (British pound/dollar)
USD/CHF (dollar/Swiss franc)
These are the Commodity Pairs:
AUD/USD (Australian dollar/dollar)
USD/CAD (dollar/Canadian dollar)
NZD/USD (New Zealand dollar/dollar)
Do you want to learn about what is spread in forex?
06th Jul 2022[…] difference between the bid and ask prices of a currency pair is known as a forex spread, and it is commonly measured in pips. When trading forex, it’s […]