1. What is Forex All About?
Forex means FOReign EXchange and it is a global market where the world’s
currencies are traded, one currency against another. Central Banks, Commercial
Banks, Large and Small Corporations, Institutional Investors, Individual Traders and
Common Tourists occasionally need to exchange one currency for another.
Examples:
Take for example an importer who is based in the US and wants to import 5
Mercedes Trucks from Germany. He must exchange US Dollars for the European
Currency (EUR) in order to pay for his import, so he must make a transaction in the
Forex Market.
■ Importer Buys EUR and sells USD
In the opposite example, a tourist from Germany wants to visit New York so in order
to pay for his hotel he must exchange Euros for US Dollars. This transaction will also
be made in the Forex market.
■ Tourist Buys USD and sells EUR
Forex Currency Pairs & Main Categories
Currencies are traded in pairs, you buy one and at the same time you sell another
currency. In any currency pair (in the above example EURUSD) the purchased
currency is called the Base Currency (EUR) and the sold currency is called the Quote
Currency (USD).
There are three Main Categories of Forex Currencies:
i)
ii)
iii)
Forex Majors (the most popular and traded pairs: EURUSD, GBPUSD,
USDJPY, USDCHF, USDCAD, AUDUSD and NZDUSD)
Forex Minors (less popular pairs and thus more expensive to trade)
Forex Exotics (no-popularity and thus very expensive to trade)
What is a Forex Lot?
A Forex Lot is the standard unit size of a Forex transaction. There are 3 different lot
sizes:
■ Micro Lot Size (equals $1,000) → Suitable for Forex Beginners
■ Mini Lot Size (equals $10,000) → Suitable for Semi-Advanced Forex Traders
■ Standard Lot Size (equals $100,000) → Suitable for Advanced and Pro Traders
Forex Guide v1.0 – Qexpert.com
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