How and with what is traded on Forex market.

How and with what is traded on Forex market

So far, we have learned that forex trading is traded with currency pairs. Trading is very easy and quite similar to trading on the stock market. If you have already traded on the stock exchange, you will also get used to trading forex.

In the forex trading, you are trading with currency pairs, where you buy or you are hoping that the price of the currency you bought will rise, compared to the other currency in the currency pair.

Example:

In June you bought 10,000 Croatian kunas for holiday at sea at the rate of 1 EUR = 7.5 HRK. You paid € 10,000 for € 10,000.

Since you later changed your mind and went to the sea elsewhere, you sold the Croatian kuna in September, when their exchange rate has changed, for 1 EUR = 7.0 HRK. In September, you sold 10,000 Croatian kunas for € 1,428.57, earning € 100. The value of the currency that you bought (Croatian kuna) has strengthened, since we needed less money to buy one euro.

The first or The primary currency in a currency pair (eg EUR / USD) is called “Base”, the second or Secondly, “Quote”.