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What is forex?

Forex is the biggest Financial Market in the world. $5.3 Trillion worth of money is being exchanged each and every day. It is ForEx, which is a combination of the words “Foreign” and “Exchange” where one Currency is exchanged for another – as you know, countries use money in the form of a currency, because our economies are not the same, the value of that currency from country to country is not the same. For example, $1 is not equal to R1. So, because these currencies are not equal, we take advantage of the price difference between exchange rates of one currency when compared to another (We participate in what is called Contract for Differences i.e. We make Money based off of the Differences between price when we click buy/sell and when we close that position).

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Forex trading is the simultaneous buying of one currency and selling of another. Currencies are traded through a middle-Man called a Broker and they are traded in pairs. For example, USDZAR (the United States Dollar vs the South African Rand). Because you are 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, for instance, the Great British Pound, you are in effect buying a share of the British economy as the price of the currency is a direct reflection of the market’s view of the current and future health of the British Economy.

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