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The foreign exchange, also referred to as forex trading, is defined as the process of buying and selling currencies around the world. It represents the most liquid market anywhere in the world and, in fact, the largest, running 24/5 days with a volume of over six trillion dollars daily. To an unaccustomed person, the Forex might be hard to comprehend; at any rate, the first step toward mastering this giant financial tool is pretty much understanding the fundamentals.
Currencies always come in pairs in Forex; these pairs look something like this: EUR/USD. The first currency, as it sounds, is called the base currency, while the second one is referred to as the quote currency. People buy a currency if they believe it will appreciate vis-à-vis the quoted currency or sell it if they think it is going to depreciate.
The major key terms and concepts are explained below.
Pip: It is the smallest price movement of a currency pair.
Leverage: The relationship of the value of the position to the capital that is invested.
Spread: It is essentially the gap between the buying price and the selling price.
Learn the basics, pick a good broker, and then open a demo account to practice with it in the market-risking not your actual money. Once you have a trading plan in place, manage your risk judiciously and start small. Knowledge and discipline can let 'anyone' make money through Forex trading.
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