Currency trading is quite easy to learn compared to stock trading. The Stock Exchange is controlled by the central body, while currency trading is not, and this means there are no options or future in trading in this market. Similarly, there is no arbitration panel to handle disputes, and there is no clearing house to guarantee trade. Trade in the currency market is done with a credit agreement between traders and brokers.
Currency trade is now the largest market in the world, with an estimated two trillion US dollars traded every day. You may find it difficult to understand if you are used to sharing trading, but with a little exercise the currency trading market works very well.
The stock exchange income is around fifty billion dollars a day, so you can see that currency trading is greater than all other equity markets in the world together.
How does it work?
Simply put, the currency trading market buys and sells different currencies, usually in large quantities. The idea is to take advantage of the shift in relative currency value, and thus make a large enough profit. Every world currency has its value compared to other currencies, and if you have enough information in these regularly and on time, you can use this information properly.
The first thing to learn about currency trading is the basically successful way. If you don’t master the basics, you can get lost and don’t make a profit. You need to understand how the world currency purchase and sales work, before you start carrying out your own trade.
Which currency is traded?
There are seven pairs of world currencies that are usually traded, even though others can trade too. The four main pairs are as follows:
US Dollar – British Pound USD / GBP
US Dollar – Euro USD / EUR
US Dollar – Swiss Franc USD / CHF
US Dollar – Japanese Yen USD / JPY
Three remaining pairs that are usually traded are this:
US Dollar – Canadian Dollar USD / CAD
US Dollar – USD Australian Dollar / AUD
US Dollar – New Zealand Dollar USD / NZD
Other combinations of these pairs are also traded, and together form around 95% of the total currency trading market. Although the number of couples is actively used in trading small currencies, their income is large enough to make this market overall more popular than the stock market.
It is important not only to find out this basic information, but other details also, to be successful in the currency trading business. With an understanding of market basics you can then build your knowledge of more complex things like:
* Psychology trade
* Forex system or currency trade
* risk management