Forex is the buying and selling of currencies.

The term "forex trader" can refer to an individual trader on a retail platform, a bank trader using their institutional platform, or hedgers who manage their own risk or outsource that function to a bank or money manager.

The foreign exchange market, abbreviated as forex (FX), is a decentralized market that facilitates the buying and selling of various currencies.

Forex traders may be drawn to it for a variety of reasons, including:
The size of the foreign exchange market
A wide range of currencies is available for trading.
Varying degrees of volatility
Transaction costs are low.
During the week, trading is available 24 hours a day.

FOREX TRADING TERMS
Base currency: When quoting a currency pair, this is the first currency that appears. When it comes to EUR/USD, the Euro is the base currency.
Variable/quote currency: This is the second currency in the quoted currency pair, and in the EUR/USD example, it is the US Dollar.
Bid: The bid price is the most a buyer (the bidder) is willing to pay. When looking to sell a forex pair, this is the price you'll see, which is usually to the left of the quote and is frequently in red.
Ask: This is the inverse of a bid and represents the lowest price a seller will accept. This is the price you will see when looking to buy a currency pair, and it is usually to the right and in blue.
Spread: This is the difference between the bid and asks prices, which represents the actual spread in the underlying forex market plus the broker's additional spread.
Pips/points: A pip, also known as a point, is a one-digit move in the fourth decimal place. This is how traders frequently refer to currency pair movements, such as the GBP/USD rallying 100 points today.
Leverage: Leverage enables traders to trade positions while only putting up a fraction of the total trade value. This enables traders to control larger positions with less capital. Leverage magnifies both gains and losses.
Margin: The difference between the full value of your position and the funds lent to you by the broker is the amount of money required to open a leveraged position.
Margin call: When the total amount deposited, plus or minus any profits or losses, falls below a certain threshold (margin requirement).
Liquidity: Because many participants are trading the currency pair, a currency pair is considered liquid if it can be easily bought and sold.

TWO SIDES TO EVERY MARKET IN FOREX TRADINGThe way prices are quoted in the Forex market is one of its distinguishing features.
Because currencies are the foundation of the financial system, the only way to quote one is with other currencies.
This results in a relative valuation metric that, while initially perplexing, can become more normalized the longer one works with this two-sided convention.
Forex trading in pairs does provide the trader with some extra flexibility by allowing the trader or investor to voice their trade against the currency that they believe is most appropriate.

Consider the Euro.
Assume a trader has optimistic projections for the European economy and wishes to go long on the currency.
But suppose this investor is bullish on the US economy but bearish on the UK economy.
In this case, the investor is not required to buy the Euro against the US Dollar (a long EUR/USD trade); instead, they can buy the Euro against the British Pound (a long EUR/GBP trade).
This gives the investor or trader more flexibility, allowing them to avoid 'going short' the US Dollar to buy the Euro and instead buy the Euro while going short the British Pound.

BASE CURRENCY VERSUS COUNTER CURRENCY
The convention of a Forex quote is an important distinction: the first currency listed in the quote is known as the 'base currency of the pair, and this is the asset being quoted.
The second currency in the pair is known as the 'counter' currency, and this is the quote's convention, or the currency used to define the value of the first currency in the pair.

WHAT EXACTLY IS A 'PIP'?
The base unit of measurement in a currency pair is the pip, which stands for 'percentage in point.
The value of a pip varies depending on the pairing's counter-currency. For currency pairs where USD is the counter currency or is listed second in the quote, the pip value or cost is frequently $1 for a 10,000 lot of currency, which also means a pip value or cost of 10 cents for a 1,000 lot and $10.00 for a 100,000 lot.
So, if an investor purchases a 1,000 lot of EUR/USD, each pip gained or lost is worth ten cents.
If the same investor purchases a 10,000 lot of EUR/USD, each pip gained or lost is worth $1.
And if the investor purchases a 100k lot, the pip value is $10/per.


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