Forex trading can sound intimidating if it is the first time you are looking at a currency exchange chart. There is a lot of jargon involved that you need to understand before placing a trade. Nevertheless, the truth is that anybody can have access to trade currencies plus make a profit.
So, what is forex trading? It’s the discipline of exchanging global currencies, which are traded against one another in pairs. Transactions take place in the forex (also known as foreign exchange or FX) market.
When you travel abroad plus swap currency for local use, you’re already participating in the global forex market. But did you know that the foreign currency market trades a daily volume of more than $5.1 trillion? Maybe you are wondering what concepts you need to learn to trade FX like a pro. We’ve got your back! By the end of this guide, you will have a better understanding of the forex basics plus the ability to read forex charts.
Major currency pairs
Majors are pairs that contain the USD on one side. They are the most liquid plus frequently traded in the marketplace. These pairs include:
EUR/USD: Euro vs. US Dollar
USD/JPY: US Dollar vs. Japanese Yen
GBP/USD: British Pound vs. US Dollar
AUD/USD: Australian Dollar vs. US Dollar
USD/CHF: US Dollar vs. Swiss Franc
USD/CAD: US Dollar vs. Canadian Dollar
Cross-currency pairs
Crosses, or minors, are pairs that do not contain USD. The most active crosses known in the market involve the three different major currencies: EUR, JPY, plus GBP.
Exotic currency pairs
Exotics are pairs made up of one major currency with another from an emerging market. Examples of emerging currencies include Brazil (BRL), Hong Kong (HKD), Singapore (SGD), plus Mexico (MXN).
To keep things sederhana while getting started in forex, we suggest focusing your efforts on the majors plus a couple of cross-currency pairs.
How to read forex charts
Now, let’s move on to deciphering graphic information. In trading, the market is represented visually through charts. A forex chart is simply one that depicts the exchange rate between two currencies over time.