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Forex Trading: Back To Basics – EVERYTHING You Ever Wanted To Know

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Let’s face it: you’ve probably been living under a rock if you haven’t at least HEARD about forex trading at this point. But for most people, their knowledge doesn’t extend past their recognition of the word. Little do they realize that they are affected by this type of trading every single day. So, what exactly IS forex trading? And how can it have an impact on your everyday life? Let’s find out…

Ever wondered what forex trading actually is and how it’s achieved? Well, first things first, forex trading stands for foreign exchange and is the process whereby one currency is trading for another. Forex trading enables different countries to trade with each other (for example China can buy coal from Australia with Yuan, and vice versa). It really is that simple.

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The currency markets can determine how currencies are valued when stacked up against each other due to something called “supply and demand”. You see, when a currency is in demand due to a country’s economic power, its value will RISE. The opposite is true when there is lower demand – the currency value will FALL. When currencies are compared to one another, they are referred to as currency pairs. For example, comparing the US dollar with the Australia dollar would be known as a USD/AUS currency pair. Got it? Good, let’s move on…

Forex trading has an effect on your everyday life, without you even realizing it! For example, when you buy something online from a seller in another country, the price of the product will have been set a certain level that provides with them a profit in the currency they are selling in. This can alter the price you pay for a sweater for example. If you were buying a product from the US and you lived in Australia, the price you’d end up paying would be down to how the Australia dollar was performing when compared to the US dollar. This effectively means that the same product could cost more or less depending on how these currencies are performing at any given time. So if you ever wondered why that sweater cost a few dollars less a few months ago, now you have an idea!

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Think about this: as most consumer electronics are manufactured outside the USA or Australia, their prices are affected by the global markets. This means that the products you purchase are influenced by forex trading whether you like it or not. Another example is when you travel abroad and you withdraw money from an ATM or use your credit card. The money you receive has already been passed through the forex market, and has been traded from one particular currency to another. This can affect how much money you get – also known as the foreign exchange rate.

If you thought that forex trading was complicated, think again. You’ve now learned some of the ways that this type of trading can affect your everyday life, and how it doesn’t have to be boring! Next time you withdraw money in another country, or order a product from abroad, think about forex trading!

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