What is forex market & how does it work?

Forex (FX) market is a global electronic network for currency trading. Formerly limited to governments and financial institutions, individuals can now directly buy and sell currencies on forex. In the forex market, a profit or loss results from the difference in the price at which the trader bought and sold a currency pair.

What currency does a forex investor trade?

Investors trade forex in pairs, which list the base currency first and the quote currency second. For example, if someone trades the JPY/USD, the Japanese yen is the base currency, and the US dollar is the quote currency. Each forex trade involves a pair of currencies.

What are pips in forex trading?

Traders frequently aim to capitalize on small fluctuations in exchange rates, which are measured in pips, which represent one one-hundredth of 1 percentage point. Note: Some forex traders use the term "greenback," which is a slang term that refers to the US dollar. Hedge funds also use brokers.

When is an option deep in the money?

The Internal Revenue Service, which is the U.S. tax office, defines an option as deep in the money whenever it has an expiration that is fewer than 90 days away and where the strike price of the option is one strike less than the highest available strike price.