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Currency trading definition
Currency trading is the practice of exchanging one currency for another to profit from changes in their relative value. It is also called forex trading or foreign exchange trading.
You trade currencies in pairs such as EUR/USD, GBP/USD, and USD/JPY, buying or selling a pair depending on whether you expect the base currency to gain or lose against the quote currency.
Currency trading responds to interest rates, inflation, central bank policy, economic data, political risk, trade flows, and sentiment. You manage the risk with position sizing, stop-loss orders, controlled leverage, and awareness of high-impact news. Most retail traders lose money trading leveraged products, so risk control matters more than any single trade.
Currency trading Example
You expect the euro to rise against the US dollar, so you buy EUR/USD at 1.0850 and set a stop-loss to cap the downside.
If EUR/USD rises to 1.0950, the euro has gained and you can close for a profit. If it hits your stop instead, you take a controlled loss.
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The information provided on this website is of a general nature only and does not constitute personal financial advice. Before acting on any information on this website, you should consider the suitability of the information in relation to your objectives, financial situation and needs. Investing in CFDs and FX Margin Contracts carries significant risks and is not suitable for all investors. You may lose more than your initial deposit. You do not own, or have, any interest in the underlying asset. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. It is important that you read and consider the disclosure document before you acquire any product listed on the website. The information and advertisements offered on this website are not intended for use by any person in any country or jurisdiction where such use would be contrary to local laws and regulations. The Products and Services offered on this website are not intended for residents of the United States, Malaysia and Thailand.
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