What is currency trading?
Currency trading, foreign exchange, or better known as Forex or FX, involves buying and selling currencies for the purpose of making a profit on the change in their value. Because it is the largest market, much larger than the stock market or any other market, there is high liquidity on the Forex market. That is why the Forex market attracts many traders, both beginners and experienced traders.
The Forex market
With approximately USD $ 4 trillion traded on the market daily, the Forex market has the highest liquidity in the world. This means that during the opening hours of the market you can buy almost all currencies and in large quantities. The Forex market is open 24 hours a day, 5 days a week, from Monday to Friday. Trading starts with the opening of the market in Australia, Asia, and then Europe and the United States until the markets close.
The opening time of the Forex market is GMT during the summer on Sunday and ends on Friday 21:00 GMT. In the winter this is 22:00 – 22:00. This means that currencies are traded at all times, day and night. Unlike other instruments, where the decline of the market may leave traders with unruly assets, a buyer or seller can always be found in the Forex market.
There are hundreds of currencies in the world, and each has a symbol of three letters. US dollars is USD, euros is EUR, Swiss franc is CHF, British pounds is GBP and this applies to all currencies.
Currency is divided into two main types: large and small currencies. The major currencies are derived from the most powerful economies in the world – the United States, Japan, the United Kingdom, the Eurozone, Canada, Australia, Switzerland and New Zealand. Together with other currencies they form currency pairs.
Currency Pairs Explained
When we go to the store to do the shopping, we exchange one value for another – money for milk, for example. The same applies to Forex trading – we buy or sell a currency for another. The currencies in the pairs are referred to as a currency against the other.
There are three types of Forex pairs: large currency pairs, small currency pairs and exotic currency pairs. The large pairs always contain USD, and are the most traded pairs. The seven large pairs are: EURUSD, USDJPY, GBPUSD, USDCAD, USDCHF, AUDUSD and NZDUSD. In the small pairs, the large pairs are traded with one another, without USD. This can be, for example, EURGBP, CHFJPY or any other combination. The exotic pairs have one major currency and one small currency, such as EURTRY, USDNOK and many others.
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