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Currency markets work via a global network of banks, business and individuals that are constantly buying and selling currencies with one another. Unlike most financial assets – such as shares or commodities – the foreign exchange market has no physical location and trades 24 hours a day.
This is called an over-the-counter market, and it means that currency prices are constantly fluctuating in value against each other, potentially offering a greater number of trading opportunities.
There are four main forex trading hubs: London, Tokyo, New York and Sydney. When trading stops in one, it starts in another.
forex trading hubs

However, forex is also traded across Zurich, Frankfurt, Hong Kong, Singapore and Paris.
At City Index, you can speculate on the future direction of currencies, taking either a long (buy) or short (sell) position depending on whether you think a forex pair’s value will go up or down. The below video shows you how to trade the EUR/USD currency pair via a CFD.

Forex trading examples
For more information on how forex trading works, look through our list of forex trading examples.
To start trading forex, you’ll need to get to know a few key concepts and terms. Let’s take a look at each in turn.
Base currencies and quote currencies
You'll always trade forex in pairs. That means when you buy one currency, you do so by selling another. And when you sell one currency, you do so by buying another.
When you buy EUR/USD, for example, you're buying the euro while selling the US dollar.
The two currencies in a pair are known as the base and the quote.
  • The base is the first currency. In EUR/USD, it is the euro
  • The quote is the second currency. In EUR/USD, it is the dollar
FX pair explained

A forex pair tells you how much of the quote currency you'll need to exchange for a single unit of the base. If EUR/USD is trading at 1.1810, then you'll need to sell 1.1810 USD to buy a single euro.
Forex traders look to take advantage of changes in the relative value of the base and quote currency in a pair. You could, for instance, buy euros for dollars when EUR/USD is at 1.1810. If the euro strengthens against the US dollar, then your euros will be worth more dollars – so can sell euros for dollars and keep the difference as profit.
If EUR/USD had dropped in price, though, you might have to sell your euros for less than you bought them. In this case, you would make a loss.

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Forex trading is literally blooming on the Internet. But it is vital not to get tempted by potential profits, otherwise you will lose everything. To be able to analyze the currency price fluctuations, you need to master the art of technical analysis. You will find plenty of information on and other sites that publish similar content.
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