Major
Forex Pairs
Forex is an abbreviation for Foreign Exchange or the trading of currencies. The forex market comes into play every time someone chooses to exchange one currency for another. Most people, corporations and institutions just change currency out of necessity. Travelers change their currency into the currency they are traveling to, corporations change currency in order to do business with foreign markets and companies and banks trade currency to hedge their investment risk. Click Here to access a signal service that recommends what and when to trade Most of us have probably at one point or another felt the effect of forex rates going up or down. If our currency falls in value it becomes more expensive to buy foreign products or to travel abroad. On the other hand, a strong currency can make our purchasing power rise. Some people however make exchanging currency their livelihood. Forex traders are speculators that make money from the fluctuations in the forex market. Forex is always traded in currency or forex pairs and money is made from forex trading by buying one currency with another and speculating that it rises in value. There are as many currency pairs as there are currencies, but only a few pairs are traded in significant amounts every day. These pairs are called the major forex pairs. The US Dollar has a special position in the global economy as the reserve currency of the world. It's also the currency that oil is traded in, which makes it by far the most traded currency in the world. Therefore all major forex pairs are quoted against the USD. The major forex pairs, which make up approximately 85 percent of the entire forex market, are:
Let's assume that you want to buy Euro with US Dollar, then the currency pair will be USD/EUR. The first currency, USD, is called the base currency. This is the currency that you use to buy the second currency, EUR, which is called the quote currency. The amount of EUR you get for one USD is the price of the currency pair. If the price of USD/EUR is 0.713, then it implies that for every one USD, you receive 0.713 EUR. If the EUR was to appreciate in value over time against the USD, then you have made a profit as you can now buy back more USD than you initially had. Click Here to access a signal service that recommends what and when to trade Most new traders start out by focusing on one currency pair only. This way they can focus their energy on learning the ins and outs of the market for that specific pair. Then when they feel comfortable with having traded one currency pair, they can add more forex pairs to their portfolio. Each currency pair is influenced by different market or economic factors. Learning how to spot and react to these factors is what makes a forex trader successful. Some traders focus on political and economic news, such as Federal Reserve reports, while some traders like to analyze the psychology of the market. Both approaches have merit as currency trading strategies.
Note: Forex Trading is a very risky form of online investment and is not suitable for many traders. Please read the investment disclaimer on Forex trading. All information on this website is for informational purposes only. The use of this website constitutes acceptance of our terms and investment disclaimer. |
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