Currency Trading - The Basics:

Forex Market, which is open 24 hours a day and five days a week, is the world’s most liquid and most traded financial market.

Here you have a choice of either trading in the currency futures market, which is controlled by physical exchange, or the forex “spot” market, where you trade over the counter with help of a broker.

Currencies are always traded in pairs, which mean you can buy one currency by selling the other. For example, If you sell the pound against the dollar (GBP/USD), you actually short (sell) the pound but at the same time long (buy) the dollar.

If you are new to forex trading, it is recommended to start off with a major pairs or crosses that are highly liquid pairs, like the EUR/USD or GBP/USD or USD/JPY.

[See Also: Understanding Major, Minor, and Exotic Currency Pairs]

Currencies move up and down by pip (percentage in points), which is measured as one-hundredth of one percentage point. When trading a dollar-based currency, one pip equals $10 for standard Lot.