To put it simply, no. Unlike the stock market that you’re probably used to, forex trading is a principals-only market. And unlike these exchange and physical-based markets, here firms are called dealers and not brokers. Dealers accept market risk by being the contra party to the investing trade. While brokers charge commission, dealers make their compensation via the bid-ask spread.

Standing for percentage in point, pip is the smallest increment or price change that can occur in exchange. In this market, prices are typically cited to this fourth decimal place (1/100^th of 1%) and the pip is equal to exactly that. To give an example, a bottle of shampoo at a drugstore would be priced at $3.50 and in the FX market, it would be priced at $3.5000.

Nothing. In the retail forex trading market, there is no tangible exchange ever. All FX trades exist virtually in a computer and are computed out per market price.

So why then does the FX market even exist? To simplify the day-to-day exchange of one currency into another for large organisations that continuously trade in the foreign market. More often than not, the main reason that FX markets exist is so that these multi-billion institutions can “express” their opinions on day-to-day fiscal and political events occurring in the world. This “trading” is, of course, purely speculative

Yes, all currencies are always traded in pairs. Knowing this, traders always know that he/she will always have “more” of one currency and “less” of the other. For example, when trading from EUR/USD, the exchange of euros to dollars would mean that the trader has “less” euros and “more” dollars. Despite the fact that there is no physical interchange in FX trading, the principle and consequences are very much just as real as any.