What is currency trading?
In its basic form, currency trading, also known as “forex trading,” is simply that–trading money. It involves trading one currency for another, such as U.S. dollars for the Euro. The exchange rate is known as the foreign-exchange rate, forex rate, or FX rate and is one of the largest markets in the world, trading trillions of U.S. dollars each day. Currency trading gained enormous popularity in the 1990s, and continues today. One reason this type of trading is so popular is that it can be done from a computer, twenty-four hours a day. There are fewer currencies to trade with, which makes learning the practice much easier (as opposed to learning about the many stock options available). The most commonly traded currencies are the U.S. dollar, the Japanese yen, and the British pound. Currencies are traded in pairs. The trader buys the one that he or she believes will appreciate in value over the other. Currency fluctuates as there is demand for it. Interest rates tend to be an indication
Currency trading is the largest market on the planet. It is estimated that in excess of US$2 trillion is traded every day. Compare this to the New York Stock Exchange’s daily transactions of approximately US$50 billion, and you can see that the magnitude of the currency trading market exceeds all other equity markets in the world combined. The practice of currency trading is also commonly referred to as foreign exchange, Forex, or FX, for short. All currency has a value relative to other currencies on the planet. Currency trading uses the purchase and sale of large quantities of currency to leverage the shifts in relative value into profit. There are two reasons the relative value of a currency fluctuates. The first is because of a ‘real’ market: as outside investors or visitors wish to buy things within a country, they are forced to convert their domestic currency into the currency of the country they are buying within. Similarly, as money leaves the country, people must sell their cu
Currency trading is speculation, pure and simple. The securities you’re speculating with are the currencies of various countries. For that reason, currency trading is both about the dynamics of market speculation, or trading, and the factors that affect the value of currencies. Put them together and you’ve got the largest, most dynamic, and most exciting financial market in the world. Often called the _”>forex market (or FX market), the foreign exchange market is the crossroads for international capital, the intersection through which global commercial and investment flows have to move. International trade flows, such as when a Swiss electronics company purchases Japanese-made components, were the original basis for the development of the _”>forex markets. The _”>forex market is unique in many respects: • Because the volumes are huge, liquidity is ever present. • The _”>forex market operates around the clock six days a week, giving traders access to the market any time they need it. •
” Also known as Foreign Exchange, Forex, or FX, currency trading attracts a lot of investors in that it is a very liquid market to invest in. The potential for profit is huge but the risks too, are very high. Unlike the stock exchange, forex accumulates a huge volume of traders. The margins may be low, but the significantly big number of traders makes up for it. In effect, when you profit, and you invested a significant amount, you’d cash in on a very high profit. What is currency trading to some investors who can afford to lose is such a big risk to those who aren’t too fluent about the business yet. A nation’s currency has a value in relation to another currency. As one buys and sells currency, one finds out that there are pairs of currencies that get traded 85% of total volume: US Dollar (USD) and Japanese Yen (JPY), Euro (EUR) and USD, USD and Swiss Franc (CHF), USD and Canadian Dollar (CAD), Australian Dollar (AUD) and USD, and British Pound (GBP) and USD. Why do currencies fluctu
