Any educated person knows what Forex is, and so should you. It is the largest financial marketplace that is located on the web only. In fact, there are no papers that you purchase or buy – Forex is a currencies exchange market. Talking about figures and scale, the money turnover of this market per day surpassed $1 000 000 000, which can be compared to the turnover of the entire US stock market, which is 30 times less.
So we come to a conclusion that Forex traders operate by trading specific currencies, i.e. buying and selling them for other currencies. To trade this way, prices of all currencies should be evaluated in the other currencies, and on Forex online they do. The trade on the market is effected only in currency pairs like Euro/dollar pair (EUR/USD).
Similar to all other markets connected with the currencies exchange, the trading operations are performed according to some firm rules. One of them you should know from the very beginning: this financial market is very convenient for huge corporations and government agencies that use it as a currency conversion instrument. In total, this market piece covers around five per cent of the whole market turnover. The rest of 95% is usually made up by other profit deals like speculating on differences. Financial experts use the “speculative deals” term to define such trading.
Currency pair, as you might have already guessed, includes two currencies. The one coming first in a pair is called “basic”, and it is in 90% of cases an American dollar. This currency affects most of the Forex rates. The rate forms when a price of a basic currency is measured in the other currency equivalence. To make it clearer, we can provide an example: in a pair of British pound in American dollar the rate is 0.6346, and this figure says how much pounds you would have to pay to buy one US dollar.
In this way, if the pair has US dollar as the basic currency, then the increase of the rate will also explain increase of the US dollar price. Vice versa, the trend will be opposite for the price of the second currency. To say it in simpler words, the price of the second currency evaluated in dollar will fall. However, American dollar is not always a basic currency; it can also be the second one, especially when paired with Australian dollar (AUD), British pound (GBR), and Euro (EUR). All of the listed currencies can serve as basic currencies.

