Economic conditions in the foreign exchange market

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After we become familiar with the Forex market and the method of Forex trading, and have gone through all of the basics of how to deal with it, in this article we will introduce the basic keys required for general understanding, namely the concepts and terminology of the language to deal with this field and hold the end of the thread attracting you the possibility of professionalism. Which you need to learn foreign exchange during your trip, this topic will become a permanent reference for you, where we introduce the most important and simplest economic terms in the foreign exchange market, we have broken down the terms and concepts of trading in the currency market into several points:

Basic foreign exchange market conditions

They are the most important terms starting with; What is forex, to get to know the market from the beginning, its formation and beginnings, currencies, currency pairs and vocabulary,What is the mechanism of the forex market, the best way to deal with it?

Forex:

 It is an Arabicization of the abbreviated English term “Foreign Exchange” and means the foreign exchange market, sometimes symbolized by the symbol FX

Financial Markets:

 Markets enable investment or trading by buying and selling assets or securities such as stocks, bonds, currencies, futures and futures contracts, and others.

Over-the-counter or OTC or over-the-counter markets:

Markets in which trading takes place in a decentralized manner without specific geographical boundaries and electronically via modern communication networks such as telephones and computers.

Exchange System:

An ancient trade exchange system based on the exchange of goods, services or assets in general between individuals to meet their needs without the presence of a money intermediary in trade transactions, and the forex trading system is very similar to this.

Bretton Woods Agreement:

An international agreement signed after the end of World War II that changes the old system of the gold standard by fixing the exchange rates of currencies against the US dollar, which is equal to 35 US dollars per ounce of gold

Currency Floating:

 The opposite of fixing the exchange rate, which means that the exchange rate can be determined based on supply and demand.

Interbank Market:

It is the cornerstone of forex trading, a market where the world’s largest investment and commercial banks determine the supply and demand of currencies, and the exchange of currencies among each other is at the heart of the forex market.

Major currencies:

 In forex trading, there are 8 currencies that are considered to be the most famous and strongest, namely the US dollar, the euro, the British pound, the Japanese yen, the Swiss franc, And many other currencies

The US dollar:

 the currency of the United States of America, the largest reserve currency in the world and the reference currency for most of the major commodities traded worldwide

EUR:

It is the currency of the European Monetary Union and the second most widely traded and used currency in the world after the US dollar.

JPY:

Japan’s currency is the third most traded currency in the world after the US dollar and the euro and is also a safe currency.

British pound GBP:

It is called the pound sterling, the currency of the United Kingdom of Great Britain and one of the oldest and most powerful currencies in the world

The Swiss franc CHF:

is the currency of Switzerland and is the only major currency that does not belong to the European Monetary Union and one of the safe haven currencies that investors fall back on during economic crises

Canadian dollar CAD:

The currency of Canada, which is the seventh most common currency in the world currency market, is used as a reserve currency by some central banks. It is considered one of the commodity currencies due to its association with oil

The Australian dollar (AUD) is the currency of Australia and ranks fifth in terms of global trade volume.

New Zealand Dollar NZD:

New Zealand’s official currency, a strong currency backed by a large world economy, an important commodity and trading currency, in addition to its trading relationship with the Asian and Australian markets

Pair system:

It is the trading system in the foreign exchange market, and it means that every trading process takes place on a currency pair – two currencies – where one currency is bought in exchange for another selling currency – a kind similar to the swap or barter system, and every currency pair is made up made up of two currencies, the first currency from the left is the base currency and the second currency is the counter currency

Major Currency Pairs:

are the currency pairs where the US Dollar is on the one hand and one of the major currencies on the other.

Currency Pairs:

 These are the currency pairs that the US dollar is not involved in. The most important of which is one or both sides of which is one of the major currencies

Exotic or Exotic Currency Pairs:

These are available for currency trading and are emerging market currencies. These pairs are not nearly as liquid or trade as the financial markets and are often traded against the US dollar or the euro

Buying Process:

This is the process of buying the base currency and selling the counter currency in the pair. He is also called Long.

Sell:

 This is the act of selling the base currency and buying the pair’s counter currency, also known as a short.

Bull:

 This is a term used by buyers by analogy with the method of attacking the bull from the bottom up, as well as the buyer looking for the lowest possible price for the commodity to buy in anticipation of it going up, and then sell at a high price to make a profit.

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