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Forex currency trading guides for beginners - Basics

What comodity is traded in Forex?

In the forex trading market, no physical commodities are traded and this can lead to some confusions.

When you buy a stock of a certain company, you are buying part of the company. In the same way, when you purchase a certain currency, you are buying a share of the currency's country. If you buy US dollar, you are buying a share of the United States.

In this view the price of the currency reflects what the market thinks of the present and future health of the country's economy.

So for example, if you buy the British Pound Stelling, you make a bet that the British econony is in good shape and will continue to be in good shape in the near future. So you are hoping you'll be able to sell the currency back in the near future for a good profit.

In general terms, a country's currency exchange rate against other currencies is a reflection of the country's economic health compared to the economies of other countries.

when you finish reading our lessons, you should develop a love of working with currencies.

The Major Currencies Involved in Forex

Major trading currencies
Symbol Country Currency Nickname
USD United States Dollar Buck
GBP United Kingdom Pound Cable
EUR Euro Zone Members Euro Fiber
JPY Japan Yen Yen
CHF Switzerland Franc Swissy
CAD Canada Dollar Loonie
AUD Australia Dollar Aussie
NZD New Zealand Dollar Kiwi

 

By convention, currency symbols must have 3 letters. The first 2 letters represent the country and the last letter stands for the name of the currency.

So the pound stelling is symbolized as GBP where GB stands for Great Britain and P stands for pound stelling. The yen is symbolized as JPY where JP stands for Japan and Y stands for Yen.You get the picture.

In the chart above, all the currencies listed are known as the "majors" because they are the most popularly traded currencies.

In the forex trading market, the only comodities traded are currency. And you never even see what you are trading.