Forex trading is converting one currency unit into another. The most commonly traded currencies include the US dollar, USD, the British pound, GBP, and EUR. Other significantly exchanged are the Australian and Canadian dollars or AUD and CAD, respectively, plus the Japanese yen, JPY.
Through your Forex broker, you’ll place an order for a currency pair. These are pairs of currencies that you’re planning to swap, and each has a different exchange rate. For instance, if the price states the EUR/USD pair is exchanging at 1.1150, it means you can get 1 euro for 1.1150 US dollars. The rate, which denotes the currency you’ll buy or sell, requires this market’s arbitration.
For beginners, you’ll understand the currencies quoted and what their exchange rate represents in currency trading. You’ll decide which type of trade to make as they can be short or long trades depending on how much the cost is to you or the spread difference.
The spread difference is the remainder between the asking and bidding price, an essential aspect of making a profit in the Forex market. When you’re a beginner trader, you can engage in long and short trades and stay aware of the risk involved in dealing with complex products.