INTRODUCTION TO FOREX

JacqStone · Newbie Joined: Jul 27, 2011 Posts: 134

In Forex, currencies are traded in pair; for example the US dollar and the Japanese Yen (USD/JPY). When you buy US dollar, means you are buying share in United States economy and you are thinking of potential rising of the current and future health of US economy. Overall, the exchange rate of Forex market is the ratio of one currency's value against another currency and it is alike the comparison between condition of two country's economy. The entire Forex market operates 24 hours a day, 5 days a week, in a network of banks. The cash markets are fully decentralized, so there are no official opening and closing hours for Forex trading.

The Forex operations do not refer to currencies by their full names because it is long and tiresome. Relatively, they use standardized codes, developed by International Standardization Organization (ISO) and known as ISO codes. As shown in table 1, ISO codes always contain three letters, which the first two letters identify the name of country while the last letter identify the name of that country's currency.

CURRENCY ISO CODE
United States dollar USD
European Members Euro EUR
Great Britain Pound GBP
Japanese Yen JPY
Canadian Dollar CAD
Swiss Franc CHF
Australian Dollar AUD
New Zealand Dollar NZD
Singapore Dollar SGD
Table 1 : The ISO codes for the most commonly traded currencies

Among all the currencies, the US dollar is the most popular traded currency as shown in figure 1. The Euro is the second while the Japanese yen and the British pound are almost similar and are the third.

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