So What Exactly Is Traded in Forex

You are going to kick yourself for this one!

It’s very simple: MONEY.

However, Forex trading can be a bit confusing, because you are not buying a physical product. It is not like going to Walmart and buying a bottle of wine. When you enter a trade in the Forex market, what you get is some figures on your computer screen. You can’t eat them or drink them – they are just numbers on your screen.

It is rather like buying shares in a country, in much the same way as you would buy shares in a company. If you bought stock of Shell, for example, you would actually own a little part of Shell.

So if you buy GBP, for instance, you are actually buying a tiny part of the British economy. The price you pay is an accurate reflection of the way the market thinks the British economy is behaving and – more important – how it will behave in the future. So you are betting that the British economy is doing well, and that it will do even better as time passes. If that happens, other people will be prepared to pay you more for your “shares” and you will make a profit.

In a nutshell, the exchange rate of any currency is a reflection of the way that that country’s economy is performing related to other countries.

Once you have obtained your Maters Degree from FXHQ Trading Academy, you will be champing at the bit to work with different currencies.

Here is a table of the major currencies that are traded:

Symbol Country Currency Nickname
USD United States Dollar Buck
EUR Euro zone Euro Fiber
JPY Japan Yen Yen
GBP Great Britain Pound Cable
CHF Switzerland Franc Swissy
CAD Canda Dollar Loonie
AUD Australia Dollar Aussie
NZD New Zealand Dollar Kiwi

 

The symbols of the various currencies have three letters. The first denotes the country – for instance GB is Great Britain – and the third is the name of the country’s currency – in this example, Pound. All of the currencies quoted above are what are known as “majors” because they are the ones that are most commonly traded.

You also probably know that the word “buck” is not the only nickname for the American dollar. There are lots more, including benjis, greenbacks, bread, cheddar, loot, paper, and several others.

So, for example, if you wanted to say to someone “I have plenty of money. Let’s go for a drink tonight”, you could also say “Yay! I got lotsa greenbacks. Let’s hit the town”.