What Traded in Forex?

Posted by: | Posted on 3:30:00 AM | Post Categories

 What Traded in Forex?

 Easy answer is currency. Because we are not actually buying anything. So this type of trading can seem a bit confusing.

When we buy a currency we are buying some shares of a country, like buying shares of an entity. The value of the currency is a reflection of the current and future economic situation of that country.

When we buy the Japanese yen, we basically buy a share in the Japanese economy. We think the Japanese economy is improving and will continue to improve in the future. When we sell those shares, hopefully we will make a profit.

In general, the exchange rate of one currency with another is a reflection of the economy of another country compared to the economy of that country.

 The currency symbol consists of three letters, where the first two indicate the name of the country and the third indicates the name of the currency of that country.

For example, in the case of NZD, NZ stands for New Zealand, and D stands for Dollar. Easy, isn't it?

The above currencies are the main reason they are the most traded. 

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