Investors can trade almost any currency in the world. Investors, as individuals, countries, and corporations, may trade in foreign exchange forex if they have enough financial capital to get started and are astute enough to make money at it. How someone makes money in forex is a speculative risk: Currencies are traded, and priced, in pairs. In this example, the base currency is the euro and the U.

In all currency quote cases, the base currency is worth one unit, and the quoted currency is the amount of currency that one unit of the base currency can buy.

So, in this example, one euro can buy 1.

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How an investor makes money in forex is either by an appreciation in the value of the quoted currency, or by a decrease in value of the base currency. Another way to look at currency trading is to think about the position an investor is taking on each currency in the pair.

The base currency can be thought of as a short position because you are "selling" the base currency to purchase the quoted currency, which can be seen as the long position on the currency pair. To purchase the euros, the investor must first go short on the U. To make money on this investment, the investor will have to sell back the euros when their value appreciates relative to the U.

Beginners who want to learn more about active trading in the forex should read A Primer forex trading foreign money exchange - the Forex MarketMoney Management Matters and Getting Forex trading foreign money exchange - In Forex. Dictionary Term Of The Day.

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By Matt Lee Updated June 7, — 2: When reading currency quotes, you have probably noticed that there is only a single quote for a pair of currencies. In a currency pair, the first currency in the pair is called the base currency and the second is called the quote currency. First, remember that in the forex markets investors trade one currency for another. Therefore, currencies are quoted in terms All currencies are traded in pairs.

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The first currency in the pair is called the base currency while the second is called The forex market allows individuals to trade on nearly all of the currencies in the world. However, most of the trading is Making money in the foreign exchange market is a speculative process. You are betting that the value of one currency will increase relative to another.

The forex market has a lot of unique attributes that may come as a surprise for new traders. Every currency has specific features that affect its underlying value and price movements in the forex market.

Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers. When trading in forex, all currencies are quoted in pairs. Find out how to read these pairs and what it means when you buy and sell them. Learn about the forex market and some beginner trading strategies to get started.

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