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Forex

FOREX

Forex is one of the most widely traded markets in the world, with a total daily average turnover reported to exceed $5 trillion a day. The forex market is not based in a central location or exchange, and is open 24 hours a day from Sunday night through to Friday night. A wide range of currencies are constantly being exchanged as individuals, companies and organisations conduct global business and attempt to take advantage of rate fluctuations.

Forex is always traded in pairs –

For example GBP/USD. You speculate on whether the price of one country's currency will rise or fall against the currency of another country, and take a position accordingly.


How does Forex trading work?

When trading Forex, you always speculate on whether the price of the base currency will rise or fall against the counter currency. So in GBP/USD if you think GBP will rise against USD, you go long (buy) the currency pair. Alternatively, if you think GBP will fall against USD (or that USD will rise against GBP), you go short (sell) the currency pair.

If you were right (that is if you went long GBP/USD and GBP went up in value against USD), you would make a profit. If the trade went against you, however, you would make a loss. You can trade forex using leverage, which allows you to increase your potential profit, but it also increases your potential loss.




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