Forex (FX) Trading is the process of buying and selling international currencies in order to make a profit from the difference between the buying and selling price. Each currency is traded in a pair with another currency and is known as a forex pair. In each forex pair, the currency listed first is called the “base currency” (this represents the volume you want to trade) while the one at the second position is called the “quote” currency (this represents the current exchange rate).
For example, the most commonly traded currency pair in the international market is the EUR/USD (Euro/US Dollar). This shows how much USD can be exchanged for one EUR.
EUR/USD = 1.2200
The spot price of each currency fluctuates on the back of several factors such as geopolitical events, economic outlooks, news data releases, and other factors which can impact any economic activity.