Forex Trading – Introduction to forex trading

In 1944 44 nation along with USA developed new international monetary system “Bretton Woods System”, for further details please refer to Wikipedia. The basic idea behind this system was to tie diffrent currencies to US Dollar that is convertible into gold (X US Dollars per ounce of gold).

Price of a particular currency is determined on the basis of demand and supply for that currency.

Forex market is the place where different currencies are traded against one another, and this article we explore basis of forex market to understand it better.

Average daily turnover in the global foreign exchange market from 1998 to 2019 Source: statista

YeearAverage daily turnover (in trillion US dollars)
Average daily turnover in the global foreign exchange market from 1998 to 2019 Source: statista

Global Foreign Exchange (Forex) market operations time

From Monday to Fridayforex market operates *24 Hours a day throughout the globe, as forex market from one region of the world closes the market from another region opens. Following table a picture summaries the opening and closing of forex markets in different regions of the world.

Forex MarketOpening Time (GMT))Closing Time (GMT))
New York13:0022:00
Global Foreign Exchange (Forex) market operations time

Understanding the structure of Forex market

Forex market participants can be divided into following levels.

Level 1: Interbank

At this level banks exchanges currencies with each other.

Level 2: Forex Brokers

Forex brokers are linked with the banks and offer forex trading services to their clients.

Level 3: Forex Traders

Forex traders are the retail forex traders who trade in different currencies using Forex brokers.

Forex market participants are generaly divided into following categories.

  1. Central Banks and Governments
  2. Financial Institutes like Commercial Banks
  3. Commercial Companies
  4. Speculators

Forex Trading pairs

Pairs are used to trade in forex market, to buy one currency you will have to sell equivalent of another currency.

To buy GBP (British pound sterling) you will sell USD (United States Dollar)

  • The first currency in the pair is called the base currency, in above example GBP is the base currency.
  • The second currency in the pair is known as quote currencyUSD in above example is the quote currency.

Above pair will be known as GBPUSD.

A simple trade scenario

  • Current market price for  GBPUSD pair is 1.4100 to buy one GBP (the base currency).
  • This means you will have to give USD 1.4100 (the quote currency) to buy one GBP (the base currency).

Major Currency Pairs

Following are the major currency pairs traded in forex market, these major pairs represent almost 80% of the daily trade volume on global forex market .

PairDescriptionNick Name
EUR/USDEuro / United States DollarEuro
USD/JPYUnited States Dollar / Japanese YenGopher
GBP/USDBritish Pound Sterling / United States DollarCable
USD/CHFUnited States Dollar / Swiss FrancSwissie
USD/CADUnited States Dollar / Canadian DollarLoonie
AUD/USDAustralian Dollar / United States DollarAussie
NZD/USDNew Zealand Dollar / United States DollarKiwi


Currency pairs not involving USD directly are known as crosses, to trade in such currency pairs you will trade first a pair that involves USD.


TO trade EURO/JPY pair you will have to.

  1. Exchange EUR to USD using EUR/USD pair.
  2. Covert USD to JPY using the USD/JPY pair.

Some of the common cross pairs are.

GBP/JPYBritish Pound Sterling / Japanese Yen
EUR/JPYEuro / Japanese Yen
AUD/JPYAustralian Dollar / Japanese Yen
NZD/JPYNew Zealand Dollar / Japanese Yen
EUR/GBPEuro / British Pound Sterling
NZD/AUDNew Zealand Dollar / Australian Dollar
EUR/CHFEuro / Swiss Franc

Consider following before trading in crosses.

  • Crosses are normally considered risky.
  • Crosses are not heavily traded so they are less liquid (in comparison of major pairs).
  • Crosses are more volatile.
  • Crosses are considered easy to manipulate.


Currency pairs involving one of the currency of an evolving economy are known as exotics.

Following is the list of some exotics.

EUR/TRYEuro / Turkish Lira
USD/TRYUnited States Dollar / Turkish Lira
USD/DKKUnited States Dollar/ Danish Krone
USD/HKDUnited States Dollar / Hong Kong Dollar
USD/SGDUnited States Dollar / Singapore Dollar
USD/MXNUnited States Dollar / Mexican Peso

That’s it, hope you enjoyed it. You like this article, have any questions or suggestions please let us know in the comments section.

Thanks and Happy Learning!

This article is part of a series on Beginner’s guide to online stock, forex and commodity trading.

** Thumbnail and Post Image By Business vector created by gstudioimagen –

Shoket Mahmood Ahmed

56 thoughts on “Forex Trading – Introduction to forex trading

  1. I’d like to thank you for the efforts you’ve put in penning this website.
    I am hoping to check out the same high-grade blog
    posts by you in the future as well. In fact, your creative writing abilities has motivated
    me to get my own blog now 😉

  2. Hey There. I found your blog using msn. This is a very well written article.
    I’ll be sure to bookmark it and come back to read more of your useful info.
    Thanks for the post. I’ll definitely return.

  3. Great blog! Do you have any recommendations for aspiring writers?

    I’m planning to start my own blog soon but I’m a little lost on everything.

    Would you propose starting with a free platform like WordPress or go for
    a paid option? There are so many options out there that I’m completely confused ..

    Any ideas? Cheers!

  4. I am curious to find out what blog system you
    have been utilizing? I’m having some minor security problems
    with my latest website and I would like to find something more safeguarded.
    Do you have any recommendations?

  5. It’s a pity you don’t have a donate button! I’d without a doubt donate to this fantastic blog!

    I guess for now i’ll settle for bookmarking and adding your RSS feed to my Google account.
    I look forward to fresh updates and will talk about this blog with my Facebook group.
    Chat soon!

  6. I believe that is among the so much vital information for me.
    And i’m glad reading your article. But want to observation on some
    basic things, The site style is great, the articles is really great :
    D. Just right process, cheers

  7. Fantastic blog!
    Do you have any hints for aspiring writers?
    I’m planning to start my own site soon but I’m a little
    lost on everything. Would you recommend starting with a free platform like WordPress or go for a paid option?
    There are so many options out there that I’m completely confused ..

    Any ideas? Thanks!

  8. I wish to convey my affection for your generosity supporting those individuals that absolutely need help on this subject. Your very own commitment to passing the message along ended up being especially important and has constantly encouraged women much like me to get to their aims. The helpful key points implies much to me and much more to my office colleagues. Thanks a ton; from everyone of us. Karlee Leopold Gibeon

  9. Donec mollis nunc rutrum, molestie mauris dignissim, sagittis risus. Fusce lacinia vel velit varius sollicitudin. Vivamus porttitor orci nec turpis egestas posuere. Aenean eget rhoncus massa. Donec ante erat, molestie ac enim a, accumsan cursus est. Donec eleifend mattis massa, ut aliquet quam consectetur id. Quisque et elementum diam. Sed congue ligula non leo pharetra consectetur. Elsie Fredek Joselow

  10. After exploring a handful of the blog articles on your web site, I seriously appreciate your way of blogging. I book marked it to my bookmark website list and will be checking back soon. Please visit my website as well and tell me what you think. Dyane Pepillo Collyer

  11. I am really loving the theme/design of your web site. Do you
    ever run into any browser compatibility issues? A few of my blog audience
    have complained about my blog not working correctly in Explorer but looks great in Opera.

    Do you have any advice to help fix this issue?

  12. After looking over a handful of the blog articles on your site, I seriously like your way of blogging. I added it to my bookmark webpage list and will be checking back soon. Take a look at my website as well and let me know how you feel. Maible Darrell Elwira

  13. I think you can give YouTube a trial and monetize your channel as well. People will subscribe and get notification every time you uplaod a new video. Your subscribers that business are inclined that watch on instagram will surely watch it on YouTube. Much more that the videos are 1-2 minute long, even if it is 5minute I think those that enjoys and learn from it will still subscribe and watch. Viki Mortie Francene

  14. Hey there. I discovered your web site by the use of Google while looking for a related matter, your web site got here up. It looks great. I have bookmarked it in my google bookmarks to come back then. Auroora Yance Noma

  15. I think other website proprietors should take this website as an model, very clean and fantastic user friendly style and design, as well as the content. You are an expert in this topic! Monika Eal Frayda

  16. Hi there. I found your website via Google at the same time as looking for a comparable matter, your site got here up. It seems to be great. I have bookmarked it in my google bookmarks to come back then. Dacy Jessey Wilhelm

  17. Hi Cameron! This is my first comment although I have travelled with you vicariously all the way, enjoying every installment enormously. I am so sorry it is over and hope you are able to update us as often as possible on your continuing adventures. Also I am delighted to hear of your interest in depression and mental health, improvement in services and attitudes being such an important goal. Congratulations for completing your epic journey and doing it so entertainingly. Looking forward to more! Pat Johnson. Ralina Frasco Dine

  18. Appreciating the persistence you put into your blog and in depth information you provide.

    It’s awesome to come across a blog every once
    in a while that isn’t the same old rehashed material.
    Fantastic read! I’ve bookmarked your site and I’m adding your RSS feeds to
    my Google account.

  19. Its like you read my mind! You seem to know so much about this, like you wrote the book in it or something. I think that you could do with a few pics to drive the message home a bit, but instead of that, this is wonderful blog. An excellent read. I will certainly be back. Sydney Hebert Emelina

  20. Pretty nice post. I just stumbled upon your blog and wanted to
    say that I have really enjoyed browsing your blog posts.

    In any case I will be subscribing to your rss feed and I hope you write again soon!

Leave a Reply

Back to top