What is the difference between an index and a forex pair?

Indices markets can enable you to gain exposure to a wide variety of markets. Whereas when trading a Forex pair you are trading between two currencies, when trading an index you are trading a range of instruments that make up that index. An example of this is the S&P 500 index.

What currencies are used in forex trading?

The bulk of forex trading involves just three currencies – US Dollars, Euro and Japanese Yen. (For example, selling US Dollars to buy Euros, selling Euros to buy Yen and so on.) But of course forex trading can take place between any two of the many currencies used around the world.

What are examples of indices with market capitalisation?

Examples of indices with market capitalisation: S&P 500, FTSE 100, NASDAQ Price-weighted indices use a company’s share price to determine how much it can move an index. In other words, companies with higher share prices will have a greater influence on these indices.

What is 'Forex' or 'FX'?

‘Forex’ or ‘FX’ stands for ‘fforeign exchange’. You sell the currency you are holding, let’s say Pounds Sterling, and buy another one, let’s say US Dollars.