Financial markets include equities, metals, bonds, futures, and other asset classes. The most actively traded of these is the currency market, known as Forex or Foreign Exchange.
With daily volumes exceeding five trillion dollars, CG is the largest and most liquid market in the world, operating without a centralized exchange.
To understand how trading works in practice, we will review a simple example using an online CFD trading platform.
Forex prices are available 24 hours a day, five days a week, covering all major global exchanges.
Currency values reflect both current economic conditions and future expectations. Positive news typically strengthens a currency, while negative news weakens it.
Profits or losses are realized when a position is closed on the trading platform.
Currency pairs show the value of one currency relative to another.
Buying a pair means purchasing the first currency and selling the second, while selling works in the opposite direction.
This is similar to exchanging money at a bank or currency exchange office.
If EUR/USD is quoted at 1.07407, one euro equals 1.07407 US dollars.
The base currency is the euro, while the US dollar is the quote currency.
All buy and sell decisions are made based on the base currency.
Selecting “Buy” opens a position, while “Close” ends the trade.
CFD platforms allow trades to be closed directly without placing an opposite order.
Every trade represents one side of a continuous buying and selling process.
The spread represents the cost of opening a trade and is measured in pips.
It is similar to currency exchange offices, where different prices are shown for buying and selling.
Narrower spreads are generally more favorable for traders.
CG is the largest financial market in the world. Each currency pair consists of a base and quote currency.
Trades execute at Bid and Ask prices, with the spread representing the cost of trading.
