Forex Currencies

When it comes to trading on Forex or any other financial trading market, watching the stocks/assets is absolutely essential. It would be wise to peruse the fine print of the financial section of your newspaper each morning over your cup of coffee. As a business venture, it’s incredibly exciting; even the slightest change of currency value can cause ripples of loss or gain for thousands of stocks. Making sure that you are diligent and on the ball when it comes to price movement can be the difference between saving your investment and tanking it. There are eight currencies you should always keep an eye on.

Most Traded Currencies in Order of Daily Share:

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  • United States dollar (USD)
  • Euro (EUR)
  • Japanese yen (JPY)
  • Pound Sterling (GBP)
  • Australian dollar (AUD)
  • Swiss franc (CHF)
  • Canadian dollar (CAD)
  • Mexican peso (MXN)

Forex Trading: 

To trade in the Forex market, it must always be done in pairs. That means when you buy a currency, you typically sell a currency. Luckily for the beginner Forex trader, there is already a system of pairings that are uses. There are 18 pairs:

  • USD/CAD             EUR/JPY
  • EUR/USD              EUR CHF
  • USD/CHF              EUR/GBP
  • GBP/USD              AUD/CAD
  • NZD/USD               GBP/CHF
  • AUD/USD               GBP/JPY
  • USD/JPY               CHF/JPY
  • EUR/CAD               AUD/JPY
  • EUR/AUD               AUD/NZD

Why Take on the Risk? 

The Forex market is considered very high risk. Why? Because those pairings of currencies above are extremely volatile and, as you can imagine, constantly changing. But again, there are tremendous opportunities for profit with an initial investment of merely $25. There are two main ways to turn a profit on the Forex market and they cannot be stressed enough. The first is the one you probably already know because it is simple common sense: you buy a pair of currencies, wait for them to raise in value, and then sell. The second way makes a little less sense but can still net you a decent profit: selling a pair you already have, then buying it back when its rate lowers.

So what does this mean in concrete terms?

As an example, imagine you buy a pair of currencies at the ask rate:

Buy 1EUR / Sell 1.5422USD

Conversely, you could sell the pair of currencies at the bid rate:

Sell 1EUR / Buy 1.5422USD

As mentioned above, the Forex market is a constantly changing beast. Depending on the way it moves, you can buy and sell the currencies when the hit a higher rate; or you can sell them immediately, wait for them to drop to a lower rate and buy them back. Either way, you walk away with a profit.

The Major Forex Market Centers in Order of Trading Volume:

  • London
  • New York
  • Singapore
  • Tokyo
  • Hong Kong
  • Zurich
  • Sydney
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