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All Forex currencies are traded in currency sets. In currency pairs, one currency is sold and one currency is bought. The currency how the investor buys is called the base currency, and the currency how the investor sells is known as quote foreign currency. The pairing of the two currencies determines the price. For example, if an investor wanted to offer the American dollar (USD) and purchase the Australian dollar (AUD), your own currency pair would be listed as USD/AUD. The pair would be quoted in terms of how much American settlement is needed in order to one Australian dollar. A quotation of 1.9805 for USD/AUD means that 0.9805 American dollars is needed to purchase every 1.0000 dollar in Australian currency. Economical in a value of zero.9805 for every USD/AUD pair sold.
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Foreign exchange is also a purely speculative market. “Speculative” means that Forex investors are not trading actual currency. Rather, they are trading the value of a currency rather rather than the currency itself. Because of this, Forex investors don’t own a currency like they might own shares of items. Instead, when the price of the currency rises or falls, the Trader makes money on the enhancements made on value.