In the Forex market, we deal with currency. Another name for the Forex market is Foreign Exchange Market. Basically, it involves selling one currency in order to buy another. In forex, traders are not going to buy anything in physical form. The forex market is consists of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors.
Here’s an analogy – buying a currency is like buying a share in a company. The price of a currency is generally a direct reflection of the market’s opinion on the current and future health of its respective economy. In Forex trading when you buy say US dollar so basically you are buying a “share” in the economy of the US. So you are betting that if the US economy is going well, and will even get better as time goes. You sell those “shares” back to the market, Hopefully, you will end up with the profits. The exchange rate of currency with other currencies is the mirror of the condition of that country’s economy comparatively other country’s economy.
The forex market is the largest financial market in the world. In forex, a trader traded with the help of a broker or dealer. Currencies are always traded in pairs They are quoted in relation to another currency.
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