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Something that confuses many people when they first look at the idea of Forex trading is the issue of “What am I trading?”
Let’s take a simple example: a company in England needs to buy a boatload of parts from the USA. To do this, they need a “boatload of dollars.” They exchange a “boatload of pounds sterling” for a “boatload of dollars”. When they do that, the supply of pounds is briefly increased, driving down the price–against the dollar.
