Currency trading and Currency pairs:
Currency trading: currency trading is trading on buy and sell currencies in the Forex market. The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD (the Euro and the US Dollar). Exchange rates fluctuate base on economic factors like inflation, industrial production, and geopolitical events. These factors will influence whether you buy or sell a currency pair.
The currency exchange rate is the rate at which one currency exchange for another currency. this is quite pairs such as EUR / USD (Euro and US Dollar). Exchange rates fluctuate based on economic factors such as inflation, industrial production, and geopolitical events. These factors will influence whether you’re buying or selling a currency pair.
Example of Forex Trade: The EUR / USD rate is the number of US Dollars that purchase for one euro. If you believe that the Euro will increase its value against the US Dollar, you will buy US Dollars. If the exchange rate rises, you will sell back the Euros, making a profit. Please keep in mind that forex trading involves a high risk or loss. This is called currencies of trading and now we will discuss currencies pairs in currency trading.
why trade currencies?
Forex is the world’s biggest market, with about 5 trillion dollars in daily volume and 24-hour market action.
Main differences between the Equity market and forex markets are:
- Many companies(forex brokers) don’t charge commissions–you only pay for the bid / ask spreads.
- Twenty-four hours of trading–you dictate when to trade and how to trade.
- You can trade on leverage, but this can increase potential profits and losses.4.
- You can focus on collecting from a few currencies rather than from 5,000 stocks.
- Forex is available–you don’t need a lot of money to get started.
currency pair means a pair of two different currencies, With the value of one currency compared to the other. The first listed currency of a currency pair is the base currency, and the second currency is the quote currency.
Currency pairs compare the value of one currency to another the base currency (or the first currency) vs that of the second currency or quote currency. Currencies recognize by is a currency pairing or by the three-letter alphabetical code, they associated them with on the global Forex market.
Basics of Currency Pairs
The trading of currency pairs takes place on the forex market, also known as the forex market. It is the financial world’s biggest and most liquid market. This market enables currency Buying, selling, exchanging and speculating. It also enables currency conversion for international trade and investment. The forex market is open 24 hours a day, five days a week (except holidays), and sees a huge volume of trading.
All forex trades involve the simultaneous purchase of one currency and sale of another, but we can consider the currency pair as a unit — an instrument that is purchased or sold. If you purchase a currency pair, you purchase the base currency and sell the cited currency implicitly. The offer (purchase price) reflects how much of the quote currency you need to get one base currency unit. When you sell the currency pair, you sell the base currency and receive the quote currency. The currency pair’s request (sell price) reflects how much you will get to sell one unit of the base currency in the quote currency.
Unlike the inventory or commodity market, you trade currencies
Major currency pairs
Here, EUR is the base currency and USD is the quote currency (counter currency). This means 1 euro exchange for 1.25 U.S. dollars. Another way to look at this is that buying EUR 100 will cost you $125.
There are as many currency pairs in the globe as there are currencies. The total number of currency pairs that change as currencies come and go. All currency pairs are classified according to the quantity traded for a pair regularly.
Minor Currency Pairs
We trade many Currencies in the Forex Market. Currencies that are not paired with the US dollar but comprising the Euro, UK Pound and Yen are minor pairs. These are the three most traded currencies besides the US dollar. Minor pairs have a lower market share compared to major pairs. Because of this, they may display reduced market liquidity. Lower market liquidity will cause a broker spreading wider forex dealing.
Top 14 minor currency pairs
CAD/JPY—Canadian dollar/Japanese yen
GBP/AUD—British pound/Australian dollar
GBP/JPY—British pound/Japanese yen
EUR/NZD—Euro/New Zealand dollar
CHF/JPY—Swiss franc/Japanese yen
AUD/JPY—Australian dollar/Japanese yen
NZD/JPY—New Zealand dollar/Japanese yen
GBP/CHF—British pound/Swiss franc
GBP/CAD—British pound/Canadian dollar
Exotic currency pairs
Exotic currency pairs involve emerging market currencies and These pairs are not as a liquid, and the spreads are much wider. These pairs are not traded as widely as the major or minor currency pairs. The USD / SGD (U.S. dollar / Singapore dollar) is an example of an exotic currency pair.
USD/HKD US Dollar/Hong Kong Dollar
USD/SGD US Dollar/Singapore Dollar
USD/SEK US Dollar/Swedish Krona
EUR/TRY Euro/Turkish Lira
You may also like to Read…...
- What is Forex?
- How does Forex Market Work?
- What are Forex Charts?
- Different types of Forex trading and Strategies?
- Forex Trading Tips for Beginners?