Lesson A1 · Part A: Foundations1 of 106 min
What forex actually is
The world's largest market, explained without the jargon: who trades, why, and what you are really buying.
§1One currency, priced in another
Forex — foreign exchange — is the global market for swapping one currency for another. Every trade is a pair: when you buy EUR/USD you are buying euros and paying for them with dollars at the same moment.
There is no central exchange. Banks, brokers, funds, companies and central banks trade with each other over a network that follows the sun from Sydney to New York, five days a week.
§2Who is on the other side
Most volume isn't speculation. Importers pay suppliers abroad, tourists change cash, pension funds buy foreign bonds, and central banks manage reserves. Retail traders are a small slice of a market that turns over trillions of dollars a day.
That matters, because big flows — not chart patterns — are what ultimately move prices. Learning who needs which currency, and when, is half of reading the market.
01EUR/USD = 1.0850
02Base currency: EUR (the thing you buy or sell)
03Quote currency: USD (what it's priced in)
04Meaning: 1 euro costs 1.0850 US dollars
remember this:
- Every forex trade is two currencies at once.
- The market is decentralised and runs 24 hours, five days a week.
- Real-economy flows, not retail traders, drive most of the volume.
Checkpoint
Q1.In GBP/JPY, which is the base currency?
Q2.If you buy EUR/USD, you are…