Inner of the Forex Market

The forex market works in a slightly different way than other financial markets. The products on the forex market are currencies, not stocks, bonds, or any other financial instrument. Profit on the forex market is generated by changes of exchange rates. Usually, forex exchange rates are given with the pair of currencies. For example, you can say that the exchange rate of EUR/USD is 1.5756. The first currency, the Euro in this example, is called the base currency. The second currency, the US dollar in this example, is called the quote currency. This gives the definition of the exchange rate. Exchange Rate – how much of the quote currency is needed to buy one unit of the base currency. For example, at the EUR/USD rate stated above, it takes 1.5756 US dollars to buy 1 Euro. There are seven major currencies that form the biggest part of traded pairs. They are also called “The Majors”. These currencies are: USD – United States Dollar EUR – Euro CAD – Canadian Dollar CHF – Swiss Franc GBP – Great Britain Pound JPY – Japanese Yen AUD – Australian Dollar Every currency is given a symbol in two parts: the first two letters are the country code, and the last letter is the first letter of the currency name. For example: ILS – Israeli Shekel INR – Indian Rupee NZD – New Zealand Dollar