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Forex explained

What is Forex?

Currency trading also known as Forex or FX trading can be described as the currency exchange market. Forex trading refers to the global, decentralized marketplace where individuals, financial institution and companies exchange one currency for another at floating rates which are given by actual market situation. Forex includes all the currencies in the world.

What is the currency pair?

A currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency.

Currency pairs compare the value of one currency to another — the base currency (or the first one) versus the second, or the quote currency. It indicates how much of the quote currency is needed to purchase one unit of the base currency. For example, let’s take most traded currency pair in world – EUR/USD. If value of currency pair EUR/USD is 1.2500, to get one EUR (base currency) you will need pay 1 USD and 25 cents.

How do I earn money trading currencies?

In Forex market you are betting that one currency will be valued more compared to another currency in the future. Forex is the biggest and most liquid market in the world, so the prices of currency pairs change all the time. For example, if a price of EUR/USD changes from 1.25 to 1.30 and you have one EUR and decide to change that to USD you will get 1 USD and 30 cents instead of 1 USD and 25 cents. Thanks to Forex, you can benefit on a movement of currencies in bigger scale thanks to leverage and margin.

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