•The simple
answer is money. Forex trading is the simultaneous buying of one currency and
the selling of another. Currencies are traded through a broker or dealer, and
are traded in pairs; for example the Euro dollar and the US dollar (EUR/USD) or
the British pound and the Japanese Yen (GBP/JPY).
•Because you're not buying anything physical, this kind of trading can be
confusing. Think of buying a currency as buying a share in a particular country.
When you buy, say, Japanese Yen, you are in effect buying a share in the
Japanese economy, as the price of the currency is a direct reflection of what
the market thinks about the current and future health of the Japanese economy.
•In general, the exchange rate of a currency versus other currencies is a
reflection of the condition of that country's economy compared to the other
countries' economies
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