# How does Forex Work?

• Forex trading is the simultaneous buying of one currency and selling of another
• These two currencies make up what is known as a “currency pair”
• Currencies are always traded in pairs – each currency is represented by three letters
• The first two letters represent the country and the third letter identifies the currency
• Forex pairs are read in the opposite direction of mathematical proportions or ratios

For example:
EUR/USD = 1.23700

• The currency to the left of the slash (“/”) is called the base currency (in this example, the Euro) and the currency on the right is called the quote currency (in this example, the U.S Dollar)
• This notation means that 1 unit of the base currency (that is, 1 Euro) is equal to 1.23700 U.S Dollars
• You have to pay 1.23700 U.S Dollars to buy 1 Euro
• If selling, the foreign currency exchange rate specifies how much units of the quote currency you get for selling one unit of the base currency
• In the above example, you will receive 1.23700 U.S Dollars when you sell 1 Euro

A trader would open a buy position if they believe that the value of that specific base currency would increase.

## When to Sell?

A trader would open a sell position if they believe that the value of that specific base currency would decrease.

## When can Currencies be Traded?

The spot FX market is unique among the world financial markets in that it’s open 24 hours a day, 5 days a week. See the below tables for GMT and EST trading times:

Trading sessions according to GMT (Greenwich Mean Time):

Region City Open(GMT) Close(GMT)
Europe London
Frankfurt
8:00 am
7:00 am
5:00 pm
4:00 pm
America New York
Chicago
1:00 pm
2:00 pm
10:00 pm
11:00 pm
Asia Tokyo
Hong Kong
midnight
1:00 am
9:00 am
10:00 am
Pacific Sydney
Wellington
10:00 pm
10:00 pm
7:00 am
6:00 am

Trading sessions according to EST (Eastern Standard Time):

Region City Open(EST) Close(EST)
Europe London
Frankfurt
3:00 am
2:00 am
12:00 noon
11:00 am
America New York
Chicago
8:00 am
9:00 am
5:00 pm
6:00 pm
Asia Tokyo
Hong Kong
7:00pm
8:00 pm
4:00 am
5:00 am
Pacific Sydney
Wellington
5:00 pm
5:00 pm
2:00 am
1:00 am

*Trading hours may vary with daylight savings time.

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