Currency Market is the most traded financial markets in the world. We like to think of the currency market as the, Big Kahuna of the financial markets. The currency market is the crossroads for international capital, the intersection through which the global commercial and investment flows have to move.
Daily more than $3.2 trillion get traded on the currency market. Its a market where a billion dollar of trades can be executed in a matter of seconds. Billions of dollars currency transactions may not even move the prices noticeably. You will get continuous action in the currency market. Currency market is open around the clock six days a week, enabling currency traders to act on news and events as they happen. More than anything else, the currency market is the traders market.
While commercial and financial transactions in the currency markets represent huge nominal sums, they still pale in comparison to the amount spend on speculation. By far the vast majority of currency trading volume is based on speculation.
Commercial or investment based currency trades account for less than 10% of the daily global volume. Estimates are that upwards of 90% of the daily trading volume is derived from speculation. The depth and breadth of the speculative market means that the liquidity of the overall currency market is unparalleled among global financial markets. This high liquidity in the currency market is boon for the traders. They can enter or exit a trade anytime of the day.
The biggest mental hurdle facing newcomers to currency trading especially those traders coming from other markets are getting there head around the idea that each currency trade consists of a simultaneous sale and purchase. The mechanics and terminology may take some getting used to if you are new to currency trading. Just like any financial market Currency trading has its own set of trading lingo.
For example, in the stock market, you own only 100 shares and want to see the price go up if you purchase 100 shares of Google (GOOG). You simply sell your 100 shares when you want to exit. But in currencies, the purchase of one currency involves the simultaneous sale of another currency.
This is the exchange in the foreign exchange (forex). The major currency pairs all involve the US Dollar on one side of the deal. All currency pairs have nicknames or abbreviations. US Dollar is abbreviated as USD, Euro as EUR and so on. Currency markets refer to trading currencies by pairs to make matters easier. So currencies come in pairs.
The designation of each currency is expressed using ISO codes for each currency. The most frequently traded currency pairs are: EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, UAD/USD and NZD/USD.
Although the vast majority of currency trading takes place in the dollar pairs, cross currency pairs serve as the alternative to always trading the US Dollar. A cross currency pair or a cross is any currency pair that does not include the US Dollar. Cross rates are derived from the respective USD pairs but are quoted independently. - 22871
Daily more than $3.2 trillion get traded on the currency market. Its a market where a billion dollar of trades can be executed in a matter of seconds. Billions of dollars currency transactions may not even move the prices noticeably. You will get continuous action in the currency market. Currency market is open around the clock six days a week, enabling currency traders to act on news and events as they happen. More than anything else, the currency market is the traders market.
While commercial and financial transactions in the currency markets represent huge nominal sums, they still pale in comparison to the amount spend on speculation. By far the vast majority of currency trading volume is based on speculation.
Commercial or investment based currency trades account for less than 10% of the daily global volume. Estimates are that upwards of 90% of the daily trading volume is derived from speculation. The depth and breadth of the speculative market means that the liquidity of the overall currency market is unparalleled among global financial markets. This high liquidity in the currency market is boon for the traders. They can enter or exit a trade anytime of the day.
The biggest mental hurdle facing newcomers to currency trading especially those traders coming from other markets are getting there head around the idea that each currency trade consists of a simultaneous sale and purchase. The mechanics and terminology may take some getting used to if you are new to currency trading. Just like any financial market Currency trading has its own set of trading lingo.
For example, in the stock market, you own only 100 shares and want to see the price go up if you purchase 100 shares of Google (GOOG). You simply sell your 100 shares when you want to exit. But in currencies, the purchase of one currency involves the simultaneous sale of another currency.
This is the exchange in the foreign exchange (forex). The major currency pairs all involve the US Dollar on one side of the deal. All currency pairs have nicknames or abbreviations. US Dollar is abbreviated as USD, Euro as EUR and so on. Currency markets refer to trading currencies by pairs to make matters easier. So currencies come in pairs.
The designation of each currency is expressed using ISO codes for each currency. The most frequently traded currency pairs are: EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, UAD/USD and NZD/USD.
Although the vast majority of currency trading takes place in the dollar pairs, cross currency pairs serve as the alternative to always trading the US Dollar. A cross currency pair or a cross is any currency pair that does not include the US Dollar. Cross rates are derived from the respective USD pairs but are quoted independently. - 22871
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Learn Currency Trading. First Trade Your Forex Demo Account!
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