Currency Trading

Currency Trading

¿Qué es
Currency Trading?

From the beginning of time, trading goods for survival led to a need for seeking improved ideas on exchange methods and mediums. currency trading is already playing an important role in our daily lives, we are all forex traders, and most of us are also currency traders in one way or another. Most people are not even aware that they have been involved in currency trading and forex trades.

Have you ever travelled abroad? Then, you have probably exchanged your country’s currency into another country’s currency, that is foreign currency trading! The process of converting a currency into another currency – but not necessarily a forex currency, such as cryptocurrencies - for a variety of reasons is called currency trading or forex currency.

The forex currency market can be explained as a global network of buyers and sellers who exchange currencies between each other at an agreed price. The universal nature of the foreign exchange market makes it available and accessible to everyone. The forex currency market tends to be the largest and most liquid asset market in the world.

How Does Currency Work?

Traditionally, we know that currency is a medium of exchange usually issued by governments and generally accepted at its face value as a means of payment. The value of a currency is mainly determined by its demand, just like the value of goods and services on an exchange rate. More accurately, the forex currency market is where currencies are exchanged in currency pairs according to the current values and pricing.

The value of a forex currency -and currencies in general - results from various factors such as the National gold reserve values. Having already entered the digital era, currencies can not only be traded with a forex currency (currency pairs), commodities, metals, indices, and shares - including currency stocks - but also with virtual currencies. The value of a currency reflects a Nation’s or Union’s economy's stamina on the global forex currency market. Just like a universal economic arena.

Over-the-counter (OTC) or off-exchange trading is done directly between two parties without the supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges. A stock exchange has the benefit of facilitating liquidity, providing transparency, charting prices in real-time, and maintaining the current market price. Some of the largest and most important stock exchanges globally are the Hong Kong Stock Ex change, the NASDAQ (New York), the Sydney Stock Exchange (SSX) in Australia, and the Tokyo Stock Exchange.

The global forex market has given forex traders access to trade on CFDs, derivatives, stocks, and numerous other products.

What moves Currencies?

The main two driving forces of the forex currency market‘s volatility are supply and demand, placing the forex currency trading amongst the most distinct volatility performers in the markets. The economic situation of the countries involved, in addition to geopolitical risk and instability, can undoubtedly affect trade, financial flow, and consequently the interest rate of a currency. In such situations, the stock market price fluctuations can be excessively strong, creating opportunities for traders to generate returns investing in foreign exchange.

Volatilidad in
Cuenta de Trading en Forex

Events such as the official speech of a central bank president can either positively or negatively impact the value of currencies and assets in general. An unfortunate event of turmoil between countries could be a serious force to shake the markets. When a currency’s supply is greater than its demand most likely will decrease its value and vice versa.

When demand is greater than supply, then the value of the currency will most probably increase. The most-traded currencies are the ones that contribute remarkably large volumes related to transactions.

Events such as the official speech of a central bank president can either positively or negatively impact the value of currencies and assets in general. An unfortunate event of turmoil between countries could be a serious force to shake the markets. When a currency’s supply is greater than its demand most likely will decrease its value and vice versa.

¿Qué es Forex?

Forex stands for Foreign Exchange and is traded 24 hours a day, 5 days a week across financial institutions, banks, investment funds, and individual forex traders across the globe. Unlike other financial markets, there is no centralised marketplace for forex currencies trade over the counter in whatever market is open at that time.

Want to learn to trade currency but don’t
know where to start?

Most people approaching the Forex currency market for the first time are wary of listening to the various terminologies. The first step becomes hard because they may think that forex trading is destined only to professional currency traders and forex traders. The question is how to choose a Forex brocker to start trading! Firstly, you need to choose a trustworthy and multi-regulated forex brocker, adhering to the highest ethical standards in forex trading and who has several years of successful presence in the financial markets. A forex brocker, who will provide you with the best conditions in trading and which combines state of the art technology (MT4 – MT5 – Mobile App - WebTrader), with consistently tighter spreads ( from 0.0pips ), a complete beginner's guide, leverage, personalised sessions with an account manager, a multilingual support team ready to assist you whenever you need. Forex traders must look for a broker who will provide you with a portmanteau of educational material such as video tutorials, articles, webinars, 20+ free multilingual webinars every month, alongside

advanced trading platforms including a sophisticated yet user-friendly mobile app to trade the markets from the palm of your hand. Daily el análisis técnico and backtesting is the general method for seeing how well a strategy or model would have done ex-post. Backtesting assesses the viability of a trading strategy by discovering how it would play out using historical data. Demo accounts are a very useful tool, especially for beginners and investors who wish to test their strategies without risking capital. It is the perfect strategy tester for low-risk tolerant traders and prudent investors. For instance, a trader could open a position on the Demo Account without investing any real funds to verify the outcome on a possible movement of the oil market. Traders now also have the opportunity to register with First Prudential Markets for Social Trading.

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Examples of
Currency Trading

Currencies are divided into three different categories. The Major currency pairs, the Minor, and the Exotic currency pairs, as we have previously mentioned, major pairs are the currencies that are being heavily traded in the forex currency market. Some of the most traded currencies according to their categories:

Major currency pairs represent some of the most powerful economic systems globally. Forex trading and trading currency pairs are the act of buying one currency against another. The first listed currency of a currency pairs is the base currency, and the second is the quote currency. A few of the most traded currencies of this category are:

  • USD/EUR - United States Dollar against the Euro;
  • USD/CHF - United States Dollar against the Swiss Franc;
  • GBP/USD – British Pound against the United States Dollar;
  • USD/JPY - United States Dollar against the Japanese Yen

Minor currency pairs in forex trading are the ones that don’t include the USD Dollar, which can also be called cross-currency pairs. Minor pairs could probably be the most fluctuating currency pair in the forex market, such as the pairs below:

  • GBP/CAD - British Pound against the Canadian Dollar;
  • GBP/JPY - British Pound against the Japanese Yen;
  • GBP/AUD - British Pound against the Australian Dollar;

Exotic currency pairs in forex trading are the combination of currencies, including one major against a currency of a developing market:

  • EUR/HUF – Euro against the Hungarian Forint;
  • USD/ZAR - United States Dollar against the South African Rand;
  • GBP/INR – British Pound against the Indian Rupee;

Other Currency Pairs:

  • USD/JPY. This currency pair sets the US dollar against the Japanese Yen.
  • USD/GBP. This currency pair sets the US dollar against the United Kingdom pound and is commonly referred to as the pound-dollar.
  • USD/CHF. This currency pair sets the US dollar against the Switzerland currency, the Swissy.
  • USD/CAD. This currency pair sets the US dollar against the Canadian dollar. The Loonie.
  • AUD/USD. This currency pair sets the US dollar against the Australian dollar, the Aussie.
  • NZD/USD. This currency pair sets the currency of New Zealand against the US dollar, theKiwi.

The Fiber – This is a synonym to the EUR/USD, which is likely - if not the most – one of the most profitable currency pairs to trade, and it has probably the highest trading volume among the currency pairs. The pillars of the global economy are the top three traded currencies, the USD, the EUR and the Japanese Yen.

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