What Is Forex – Everything You Need To Know

Do you want to know more information about the stock market? Would you like to know how to interpret certain trends and fluctuations regarding currencies? In this article we will talk about what Forex is and everything you need to know about it. The Forex, or also called the foreign exchange market, is the global and non-centralized market in which currencies are traded. Forex, by its initials Foreing Exchange, is a market that was created in order to facilitate the flow of currencies that comes from international trade. 
With a great distance from other financial markets, Forex is the largest and most important financial market in the world. To give us an idea of ​​its significance, this market can have a daily volume, due to its transactions, of approximately five trillion dollars (USD). If the total daily amount from all markets were added together, it would still be less than the figures handled by the foreign exchange market.
There are many factors that determine the value of currencies and their possible negative or positive trend . The currency represents the currency of a country and, consequently, its value with respect to other currencies is linked to the state of said country. There are also certain indices and historical currencies that can help us in this interpretation. It has grown so much that it has become independent of other business operations that are real. For this reason, it is not possible to explain in detail and exactly the variation between the prices of the coins.


If we invest in currencies, we are buying one currency at the same time that the other is being sold. We obtain benefits if the currency that we have bought rises in value with respect to the other currency that has been sold. Closing that position, we will have profits. Otherwise, we lose money.

currency pairs

In the investment of currencies, it is implicitly buying one to sell the other. It is the reason why the operations are done in pairs, since we will show the currency that is bought and the one that is sold. Each letter of the currency forms a code that communicates to us the region that belongs to the currency and the letter of the currency . For example, the US dollar can be found as follows; USD.

The quote currency and the base currency

The order in which the currencies appear within the currency pair is important. The base currency is represented by the currency that is listed first. The quoted currency is the second. To calculate the price of that pair, the value of a unit is calculated with the base currency with respect to the quoted one. If we believe that a currency is going to rise in value against another currency, we can search among the different options. We establish an amount and we can close position, if we have been successful, to obtain our profits from the operation.

the spread

This concept represents the difference between the sale price and the purchase price of the currency pair. As in different financial markets, when opening a position in Forex we find two prices. When opening a long position, we operate with the purchase price, slightly higher than the price we have in the market. If, on the contrary, we open short, the sale price operates, a little below the market value.

Leverage in Forex

Thanks to leverage, we can invest a large amount of money with only a small capital investment. In other words, we invest with other people's money. With leverage, profits multiply, but so do losses.


In the foreign exchange market, as we have been able to verify, a lot of money moves. Anyone can obtain a great fortune with a few specific operations. Still, the chances are not the same for everyone. To make a great fortune in the foreign exchange market, it is necessary to use a great capital, have great knowledge and, above all, handle top quality information.

In recent years, several companies have appeared offering their services and training, offering a real fortune.. The objectives to which they want to take us may not be entirely feasible. It is a simple reasoning, but no less logical, to think the following. If they are assuring us that we will be millionaires in a short period of time, why don't they? This means that it is not entirely profitable or safe. What is more possible is to get many clients around the world with that premise and collect commissions. That is why we must be careful with the opportunities offered to us and consult with proven professionals. There is a clear premise that we must always keep in mind; if the profits are outrageous, the risk is too. There is a direct and proportional relationship between the possible benefits and the risk of the operation.

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