The term Forex is a shortened form of foreign exchange, which is also occasionally abbreviated as FX. It refers to the worldwide, decentralized market for trading currencies. In this market, traders, investors, banks, and exchanges engage in buying, selling, and speculating on various currencies. As a result of this activity, the exchange rate for different foreign currencies is determined.
Forex involves predicting the changes in the values of two currencies from different countries. These currencies are known as "currency pairs," made up of the base currency and the quote currency. The most commonly traded currency pair is the Euro and the US Dollar, represented as EUR/USD.
The second currency in a currency pair is called the "quote currency," also known as the "counter currency." In the given example, the USD is the quote currency.
To trade forex is to buy and sell currencies – with the aim of making a profit. Forex trading will always involve two currencies at a time, the base currency and the quote currency. The difference in price is where you’ll make your profit or loss.
The "bid price" is the price that a trader is willing to pay to buy a currency pair. It is constantly changing due to fluctuations in the market.
A "position" refers to a trade that is currently ongoing. In trading, there are two types of positions: "long" and "short."
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