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Currency Trading – An Introduction

When it comes to investing, the first thing most people think of are stocks. While the stock market may be the most popular method for building wealth, currency trading is actually the largest financial market in the world.

How big is currency trading? Each and every day, the global foreign exchange market trades more than $5.0 trillion in volume. By comparison, the world’s largest stock market, the New York Stock Exchange, exchanges daily volume of around $22.4 billion.

What exactly is currency trading? If you’ve ever travelled to another country and exchanged your money into a foreign currency, you’ve participated in the Forex market. In essence, Forex (foreign exchange) is simply the practice of exchanging one currency for another at an agreed-upon price.

Unfortunately, most people have not heard of currency trading, but it’s the go-to investing platform for large institutions, central banks, and high net worth investors. Now, thanks to the Internet, everyday investors can access and profit from currency trading.

What are the most popular currencies used in Forex trading? The majority of investors trade the seven most liquid currency pairs—and account for more than 95% of all speculative Forex trading.

The four major pairs include:
  • EUR / USD (euro/U.S. dollar)
  • USD / JPY (U.S. dollar / Japanese yen)
  • GBP / USD (British pound / U.S. dollar)
  • USD / CHF (U.S. dollar / Swiss franc)
The three commodity pairs include:
  • AUD / USD (Australian dollar / U.S. dollar)
  • USD / CAD (U.S. dollar / Canadian dollar)
  • NZD / USD (New Zealand dollar / U.S. dollar)

Because these seven currencies account for 95% of all trades, the Forex market is far more concentrated than any stock market. While these are the most popular currency pairs, Forex traders can combine any currencies they want.

Because Forex trading involves a currency pair, you are essentially long on one currency and short on the other. For example, if you expect the U.S. dollar to weaken in value against the British pound, as a currency trader, you will sell (short) the dollar and buy (long) the pound. If the British pound climbs in value, the purchasing power to buy U.S. dollars has increased.

Benefits: Currency Trading Courses

Forex trading may be the largest financial market in the world, but currency trading is an unfamiliar investing strategy for most retail investors.

For example, currency trading does not occur on a regulated exchange, like the NASDAQ. Nor is it controlled by any central governing body. Forex trading is a self-regulated system conducted worldwide, 24/7 in major financial centres, including New York, London, Zürich, Paris, Frankfurt, Tokyo, Hong Kong, Singapore, and Sydney.

Like the stock market, though, currency trading takes place through a broker. Orders are placed online and when the position is closed, your broker credits your account with the gain or loss.

Currencies move up and down every day against each other because of volatility; that can include geopolitical tension, economic data, weather conditions, even sporting events. Without volatility, there is no reason for a currency to fluctuate.

How do you decide which currency pairs to trade? Unlike the stock market, there is no bear or bull market with Forex trading. Because Forex trading is unregulated, there is also no such thing as insider trading. This leaves currency trading open to a whole raft of unique currency trading strategies and challenges.

Investors interested in learning more about currency trading and how to trade Forex with confidence should take our comprehensive Learn-To-Trade.com course. As currency trading experts, we at Learn-To-Trade.com will teach you currency trading strategies and how to profit from the volatility of the global markets.

For more information on our Learn-To-Trade.com course and Lifetime Membership, e-mail us at info@learn-to-trade.com, or call us at 416-510-5560.

Contact us for detailed information on course fees and materials, future dates of our three-day trading course program, and the dates for our free two-hour workshops.

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