Forex and Currency
From here on, I call the currency their short names.
The main thing you need to understand here is that in a Forex trade, two currencies are always used. And the rate is shown as follows.
USD / LKR = 170.87
This means to buy USD 1 you need 170.87 Srilankan rupees.
Now that if you know the rates of both currencies, you can be able to make any calculation between them. Consider an example.
USD / LKR = 109.15
- How many dollars can you get for 250000 LKR?
Make sure you slove this calculation before looking at the answer.
USD Amount = 250000 / 109.15 = 2290.43 $
- Now think how much rupees you can buy for $ 1340?
LKR Number = 1340 * 109.15 = LKR 146261
I hope you are clear on this.
I have explained the above calculations using Sri Lankan Rupees to clearly show you the calculations that are taking place here because there is a huge difference between the Dollar and the Sri Lankan rupees.
But in the Forex market, you won't see Srilankan rupees.
The following are the types of currency units to be traded in the Forex market.
- United State Dollar
- Euro (used by European Union member countries)
- Great Britain Pound
- Switzerland Franc
- Canadian Dollar
- Australian Dollar
- New Zealand Dollar
These currencies are known by many different names.
Country
|
Currency unit
|
Forex symbol
|
Other names
|
United States of America
|
Dollar
|
USD
|
Buck
|
Great Britain
|
Pound
|
GBP
|
Cable
|
European Union
|
Euro
|
EUR
|
Fiber
|
Japan
|
Yen
|
JPY
|
Yen
|
Switzerland
|
Franc
|
CHF
|
Swissy
|
Canada
|
Dollar
|
CAD
|
Loonie
|
Australia
|
Dollar
|
AUD
|
Aussie
|
New Zealand
|
Dollar
|
NZD
|
Kiwi
|
One of the most important things in the above table is the Forex symbol. We need to know these short names and symbols. Because in the future we have to look at Forex news, Most of Forex news issuing companies are using the short name(other names).
For example, a news company might say that the price of Fiber is going up, then you should know that the euro (EUR) currency is going up.
Now that you know how to trade, you have to be a little more patient. If you go into the Forex market without this basic theory, you can't do anything.
Next, we will look at the major currency pairs.
Pair
|
Country
|
Short name
|
EUR/USD
|
European Union/United States
|
Euro Dollar
|
USD/JPY
|
United States/Japan
|
Dollar Yen
|
GBP/USD
|
Great Britain/United States
|
Pound Dollar
|
USD/CHF
|
United States/Switzerland
|
Dollar Swissy ට ෝ Dollar Franc
|
USD/CAD
|
United States/Canada
|
Dollar Loonie
|
AUD/USD
|
United States/Australia
|
Aussie Dollar
|
NZD/USD
|
New Zealand/United States
|
Kiwi Dollar
|
USD is the most commonly used currency in the Forex market
In addition to these currency pairs we talked about above, There are also other currency pairs in the forex market that we call minor currency pairs. (Major cross currency pairs)
Euro Crosses
Pair
| Country |
Other names
|
EUR/CHF
|
European Union/Switzerland
|
Euro Swissy ට ෝ Euro Franc
|
EUR/GBP
|
European Union/Great Britain
|
Euro Pound
|
EUR/CAD
|
European Union/Canada
|
Euro Loonie
|
EUR/AUD
|
European Union/Australia
|
Euro Aussie
|
EUR/NZD
|
European Union/New Zealand
|
Euro Kiwi
|
Yen Crosses
Pair
|
Countries
|
Other names
|
EUR/JPY
|
European Union/Japan
|
Euro Yen
|
GBP/JPY
|
Great Britain/Japan
|
Pound Yen
|
CHF/JPY
|
Switzerland/Japan
|
Swissy Yen
|
CAD/JPY
|
Canada/Japan
|
Loonie Yen
|
AUD/JPY
|
Australia/Japan
|
Aussie Yen
|
NZD/JPY
|
New Zealand/Japan
|
Kiwi Yen
|
Pound Crosses
Pair
|
Countries
|
Other names
|
GBP/CHF
|
Great Britain/Switzerland
|
Pound Swissy
|
GBP/AUD
|
Great Britain/Australia
|
Pound Aussies
|
GBP/CAD
|
Great Britain/Canada
|
Pound Loonie
|
GBP/NZD
|
Great Britain/New Zealand
|
Pound Kiwi
|
Other Crosses
Pair
|
Countries
|
Other names
|
AUD/CHF
|
Australia/Switzerland
|
Aussie Swissy
|
AUD/CAD
|
Australia/Canada
|
Aussie Loonie
|
AUD/NZD
|
Australia/New Zealand
|
Aussie Kiwi
|
CAD/CHF
|
Canada/Switzerland
|
Loonie Swissy
|
NZD/CHF
|
New Zealand/Switzerland
|
Kiwi Swissy
|
NZD/CAD
|
New Zealand/Canada
|
Kiwi Loonie
|
In addition to the currency pairs mentioned above, there are also exotic currency pairs.
Exotic pairs are less likely to be dealt with as an apprentice.
Exotic pairs are less likely to be dealt with as an apprentice.
Pair
|
Countries
| Other names |
USD/HKD
|
United States/Hong Kong
|
-
|
USD/SGD
|
United States/Singapore
|
-
|
USD/ZAR
|
United States/South Africa
|
Dollar Rand
|
USD/MXN
|
United States/Mexico
|
Dollar Peso
|
USD/DKK
|
United States/Denmark
|
Dollar Krone
|
USD/SEK
|
United States/Sweden
|
-
|
USD/NOK
|
United States/Norway
|
-
|
You don't need to remember all of the above. An apprentice only needs to remember the major currency table.
See you again in the next lesson.
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