In Forex trading , traders buy one currency while selling another. Forex UK pairs are usually specified with their abbreviations, an ISO symbol. The first-mentioned currency is the base currency , the second the counter-currency or reference currency . Both currencies have a certain relationship (rate) to each other. Traders do not trade individual currencies in forex trading, but always a currency pair. Often times the dollar comes first.
Depending on their importance, a distinction is made between majors (main currencies), minors (secondary currencies) and exotic currencies . The dominant and therefore probably the most important currency among the majors is the online trading, which is often seen as the reserve currency . This currency is the most traded on the world’s stock exchanges, which is also due to the size of the American economy .
In many transactions, the US dollar is the most important reference currency, so other currencies – majors such as minors or exotic currencies – are often traded against the dollar. Even traders who do not primarily trade with the dollar should regularly take a look at the dollar rate and current developments around this important currency , as changes in the rate of the dollar often affect other financial instruments.
The basics of Forex trading are the same for all currencies. In Forex trading in Canada, traders speculate on the relative value of one currency compared to another . The relative value, i.e. the rate, shows what a certain number of units of one currency is worth in the other currency.
In forex trading, traders buy one currency and sell another in exchange. Currency pairs that are particularly important in Forex trading are called majors, followed by minors and exotic currencies. The dollar is arguably the most important currency in the world and is the most widely traded.