1. Forex Trading
The marketplace for trading global currencies.

History and Evolution: Began with barter systems, evolved to digital trading platforms.
It is a High liquid market open 24/5.

Forex vs. Other Markets: Forex trades currencies, while stock markets trade company shares.


2. Currency Pairs
A currency pair shows the value of one currency against another (base vs. quote currency).
Example:
EUR/USD = 1.20 means 1 EUR = 1.20 USD.

Major Pairs: Include USD, e.g., EUR/USD, GBP/USD, AUDUSD

Minor Pairs: Exclude USD, e.g., EUR/GBP

Exotic Pairs: Include one major and one emerging-market currency, e.g., USD/TRY.

Cross-Currency Pairs: Pairs without USD, e.g., GBP/JPY.


3. Forex Market Mechanics
Trading Sessions: Asia (Tokyo), Europe (London), and America (New York).

USD trades actively during the New York session (3pm - 12pm)
JPY trades during the Tokyo session (1am - 10am)
London session (8am - 5pm)
Asian session (1am - 10am)
Euro session (9am - 6pm)

Market Participants:
Central banks, retail traders, corporations.

How Forex Works:
Exchange rates fluctuate based on supply, demand, and news.

4. Leverage and Margin
Leverage lets traders control larger positions with smaller capital; margin is the collateral needed to open a leveraged position.
Leverage amplifies both profits and losses.

Example: With 1:100 leverage, $100 controls $10,000.
Will use 1:2000 so we can open more trading positions with our small capital.

Leverage Ratios: Commonly 1:100, 1:500, or 1:2000.

Margin Call: Broker requests additional funds when losses reduce account equity.

5. Bid-Ask Spread and Pips
Bid is lower (sell), ask is higher (buy).

A pip is the smallest price movement in a currency pair.
Example: If EUR/USD = 1.1200/1.1202, the spread is 2 pips.

Factors Affecting Spread:
Low liquidity widens spreads. Happens at night around 11pm.