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Currencies are traded in dollar amounts called “lots”. One

lot is equal to $1,000, which controls $100,000 in currency.

This is what is known as the “margin”. You can control $100,000

worth of currency for only 1,000 dollars. This is what is called “High Leverage”.

Currencies are always traded in pairs in the FOREX. The

pairs have a unique notation that expresses what currencies

are being traded. The symbol for a currency pair will always

be in the form ABC/DEF. ABC/DEF is not a real currency pair,

it is an example of a symbol for a currency pair. In this

example ABC is the symbol for one countries currency and DEF

is the symbol for another countries currency.

Here are some of the common symbols used in the Forex:

USD – The US Dollar

EUR – The currency of the European Union “EURO”

GBP – The British Pound

JPN – The Japanese Yen

CHF – The Swiss Franc

AUD – The Australian Dollar

CAD – The Canadian Dollar

There are symbols for other currencies as well, but these

are the most commonly traded ones.

A currency can never be traded by itself. So you can not

ever trade a EUR by itself. You always need to compare one

currency with another currency to make a trade possible.

Some of the common PAIRS are:

EUR/USD Euro / US Dollar

“Euro”

USD/JPY US Dollar / Japanese Yen

“Dollar Yen”

GBP/USD British Pound / US Dollar

“Cable”

USD/CAD US Dollar / Canadian Dollar

“Dollar Canada”

AUD/USD Australian Dollar/US Dollar

“Aussie Dollar”

USD/CHF US Dollar / Swiss Franc

“Swissy”

EUR/JPY Euro / Japanese Yen

“Euro Yen”

The listed currency pairs above look like a fraction. The

numerator (top of the fraction or “left” of the / however

you want to SEE it) is called the base currency. The

denominator (bottom of the fraction or “right” of the

/however you want to SEE it) is called the counter currency.

When you place an order to buy the EUR/USD, for instance,

you are actually buying the EUR and selling the USD. If you

were to sell the pair, you would be selling the EUR and

buying the USD. So if you buy or sell a currency PAIR, you

are buying/selling the base currency. You are always doing

the opposite of what you did with to base currency with the

counter currency.

If this seems confusing then you’re in luck. You can always

get by with just thinking of the entire pair as one item.

Then you are just buying or selling that one item. Thinking

like this will still enable you to place trades. You only

need to be aware of the base/counter concept for Fundamental

Analysis issues.

So why is it important to know about the base/counter

currency? The base/counter currency concept illustrates

what is actually taking place in a Forex transaction. Some

of you reading this, know that short-selling was restricted

in the stock market *(Short-selling is where you sell a

stock/currency/option/commodity first and then try to buy it

back at a lower price later). But in the FOREX you are

always buying one currency (base) and selling another

(counter). If you sell the pair you are simply flipping

which one you buy and which one you sell. The transaction is

essentially the same. This allows you to short-sell with no

restrictions.

You want to be able to short-sell with no restrictions so

you can make money when the market drops as well as when it

rises. The problem with traditional stock market trading is

that the market has to go up for you to make money. With

FOREX trading you can make money in all directions.

[http://www.1-forex.com]

Omar Vargas; FOREX Trader and Freelance writer. [http://www.1-forex.com] Article Source: http://EzineArticles.com/?expert=Omar_Vargas

More info about WHAT IS THE FRACTION OF A EURO:

Finnish markka – Wikipedia, the free encyclopedia

The Finnish markka was added into the ERM system in 1996 and then became a fraction of the euro in 1999, physical euro money arriving later in 2002.

Sterling recovers from Fitch credit rating agency comments …

However, for the time being nothing has spooked the markets to warrant a sell-off and consequently the euro has climbed back to $1.2017, a fraction lower than $1.2042 yesterday. The EUR/USD should be watched closely though as 13:30 …

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