Currencies are traded in dollar amounts called “lots”. One lot is equal to $1,000, which controls $100,000 in currency. This is what is known as
"margin". You can control $100,000 worth of currency for only 1,000 dollars. This is what is called “High Leverage”. Currencies are always traded in pairs in FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is symbol for one countries currency and DEF is symbol for another countries currency.
Here are some of common symbols used in Forex:
USD - The US Dollar EUR - The currency of European Union "EURO" GBP - The British Pound JPN - The Japanese Yen CHF - The Swiss Franc AUD - The Australian Dollar CAD - The Canadian Dollar
There are symbols for other currencies as well, but these are most commonly traded ones.
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.
Some of common PAIRS are:
EUR/USD Euro / US Dollar "Euro"
USD/JPY US Dollar / Japanese Yen "Dollar Yen"
GBP/USD British Pound / US Dollar "Cable" USD/CAD US Dollar / Canadian Dollar "Dollar Canada" AUD/USD Australian Dollar/US Dollar "Aussie Dollar" USD/CHF US Dollar / Swiss Franc "Swissy" EUR/JPY Euro / Japanese Yen "Euro Yen"
The listed currency pairs above look like a fraction. The numerator (top of fraction or "left" of / however you want to SEE it) is called base currency. The denominator (bottom of fraction or "right" of /however you want to SEE it) is called counter currency. When you place an order to buy EUR/USD, for instance, you are actually buying EUR and selling USD. If you were to sell pair, you would be selling EUR and buying USD. So if you buy or sell a currency PAIR, you are buying/selling base currency. You are always doing opposite of what you did with to base currency with counter currency.
