What Is Traded In Forex?

What Is Traded In Forex

The simple answer is MONEY.

Because you’re not buying anything physical, forex trading can be confusing.

Think of buying a currency as buying a share in a particular country, kinda like buying stocks of a company.

The price of the currency is usually a direct reflection of the market’s opinion on the current and future health of its respective economy.

In forex trading, when you buy, say, the Japanese yen, you are basically buying a “share” in the Japanese economy.

You are betting that the Japanese economy is doing well, and will even get better as time goes. Once you sell those “shares” back to the market, hopefully, you will end up with a profit.

In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country’s economy, compared to other countries’ economies.

Major Currencies

While there are potentially lots of currencies you can trade, as a new trader, you will probably start trading with the “major currencies.”

Currency symbols always have three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency.

Take NZD for instance. NZ stands for New Zealand, while D stands for dollar. Easy enough, right? The currencies included in the chart above are called the “majors” because they are the most widely traded ones.

We’d also like to let you know that “buck” isn’t the only nickname for USD.

There’s also: greenbacks, bones, benjis, benjamins, cheddar, paper, loot, scrilla, cheese, bread, moolah, dead presidents, and cash money.

So, if you wanted to say, “I have to go to work now.”

Instead, you could say, “Yo, I gotta bounce! Gotta make them benjis son!”

Fun fact: Did you also know that in Peru, a nickname for the U.S. dollar is Coco, which is a pet name for Jorge (George in Spanish), a reference to the portrait of George Washington on the $1 note?