Lesson No 10
There is an important question that how forex trading works?, so toady we will discuss this aspect of forex trading, that how it works.
During the process of forex trade one currency is bought while other is sold out, which means that you are buying one currency and selling other currency in the pair, e.g for the pair EUR/USD, AUD/USD, and USD/JPY in this example you are buying one currency and selling other currency. In case of EUR/USD you are buying EUR and selling USD and vice versa. Currency pairs are either bought or sold out, a stronger currency is always bought while weaker currency is sold out. Strength or weakness of a currency depends upon its production, inflation, employment opportunities, political stability, its relations with other nations and law and order situation with in the country.
Division of Currency Pairs
Lesson No 11
Currency pairs are always divided into three major categories
Majors: Those pairs in which atleast one currency is USD are called Major Currency Pairs like EUR/USD, AUD/USD, USD/JPY, GBP/USD, USD/CAD, USD/CHF, NZD/USD etc.
Cross: All those pairs those dont any USD currency are called Cross Currency Pairs like NZD/JPY, CAD/JPY, AUD/NZD, EUR/JPY, EUR/GBP etc etc.
Exotic: Currencies of developing countries are included in this group like, USD/HKD, USD/SEK, USD/DKK, USD/NOK, USD/ZAR, USD/SGD etc
