LESSON 1
Introduction to the Forex market

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International exchange market (Currency exchange) — is the exchange, where operations on purchase and sale of currency take place between participants of the Forex market;
Pip (point) – is the minimum change of price of currency rate


Currency 

Currency operations – contracts of participants of currency market on purchase and sale and settlement, conversion operations etc.;

Currency rate (currency quote) — the price of currency unit of one country expressed in currency unit of another country. 

Types of quotes: 

Direct quote – shows the amount of US dollars contained in national currency unit;

Indirect quote – shows the amount of national currency contained in one US dollar; 

Cross rate – currency units of one country expressed in currency units of another country; 

Major currencies 

EUR – United European currency

USD – US dollar

GBP – British pound of sterling

CHF – Swiss Frank

JPY – Japanese Yen


Other currencies

AUD – Australian Dollar

NZD – New Zealand Dollar

CAD – Canadian Dollar 

Pairs

Currency pair is the name of text symbols of currency.
For example, EUR/USD = 1.2880 

where: 
EUR – is the base currency (traded currency) 
USD – quoted currency 
Base currency (traded) is always put the left. 
Quoted currency is always the second  
Main currencies traded on the market  
EUR/USD – European currency to US dollar 
GBP/USD – British pound of sterling to US dollar
USD/JPY – US dollar to Swiss Frank
EUR/CHF – European currency to Swiss Frank
USD/CHF – US dollar to Swiss Frank
GBP/JPY – British pound of sterling to Japanese Yen
GBP/CHF – British pound of sterling to Swiss Frank
EUR/GBP – European currency to British pound of sterling
EUR/JPY – European currency to Japanese Yen
AUS/USD – Australian Dollar to US dollar
USD/CAD – US dollar to Canadian Dollar
All speculations made by a trader are always conducted with base currency. Buying EUR/USD, you buy Euro for US dollars.


Spread – is the difference between price of purchase (Ask) and price of sale (Bid)

Cost of one point depends on volume of your trade and is equal:

Volume of trade multiplied into minimum change of price = cost of point

Open position – is the trade for purchase/sale, which is not closed and is present on market.

Credit leverage – is the relation of borrowed capital to trader's own funds.

For example, Forex broker provides trader with credit leverage 1:100, thus, trader can make a trade with volume 100 times more than his deposit.


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