What is traded?

If anybody asks me “What is traded in Forex Market?”

My answer will be in a word “Currency”.

My answer is currency because you are not buying anything physically. This trading is a little bit confusing.

Buying a currency of any country is like buying stocks of a company. When we buy the yen of Japan, the price of the currency directly reflects what the market shows about the current and future condition of the economy Japan.

When you sell the USD, you are originally selling a "share" in the economy of United Sates. Your trade means that, the American economy is not doing well, and will get worse as time passes. Once you buy those "shares" back to the market hopefully, you will end up the share with a profit.

In short, the exchange rate of a currency versus the currency of any other country shows the economical condition of that country, compared to the economy of other country.

Currencies which are mostly traded in Forex Market :

Symbol Country Currency Nickname EUR Euro Zone Members Euro Fiber USD United States Dollar Buck GBP Great Britain Pound Cable JPY Japan Yen Yen CAD Canada Dollar Loonie CHF Switzerland Franc Swissy NZD New Zealand Dollar Kiwi AUD Australia Dollar Aussie

The first three letters means the name of the currency, the first two letters symbolizes the name of the country and the third letter indicates the name of the currency of the country.

Take NZD for instance. NZ stands for New Zealand, while D stands for dollar.

The currencies remarked in the chart are called the "Majors" because these are the mostly traded ones.