Forex Education - What is Forex?

Understanding the Forex Market

What is Forex? Before you can become a successful Forex trader, you need to learn Forex and understand some of the basics.

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What is the Forex market?

The Forex online trading environment for foreign exchange encompasses the largest, most dynamic capital market in the world with more than USD 3 trillion traded daily. The Forex market is a continuous, 24/5 marketplace open from Sunday afternoon (4 PM EDT) through the close of the US markets on Friday (5 PM EDT). The Forex market is where investors can trade one currency against another currency.

Getting to know Forex Basics

What is a currency cross?

Currencies are always priced in pairs. All trades take place between two different currencies resulting in the concurrent purchase of one currency and sale of another. For example, when you trade EURUSD, the currency cross is Euros versus US dollars. One currency will be bought (long position) while the other currency is sold (short position).

What is the Bid-Ask Spread?

The bid-ask spread is the buying and selling spread between two currencies. The bid price is the price at which the currency is sold. The ask price is the price at which the currency is bought. The difference between the bid price and the ask price is known as the bid-ask spread. The bid-ask spread differs between currency crosses with more common crosses (majors) having tighter spreads.