What is Currency trading ?

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What is Currency trading ?

 

Why work in the currency trading market?

As you know, there are many types commodities that can be traded such as stocks, commodities, bonds and many more.

Each example of commodity has its own lineage, where one chooses one or more of these cases to sell.

On that point are a mass of reasons why the currency trading market is better than trading other types of markets and the most significant of these causes:

  • The currency market is open 24 hours a daylight

For direct  exchanges, a limited period of time is used every day as the bourse opens at the dawn and closed in limited time.

For instance, if you require to trade US stocks, you can exclusively buy and sell when the New York Stock Exchange opens at 9am (EST) to 4pm at the same time.

This implies that you are restricted at this time to monitor the securities industry, which requires full-time, and this gives to all other stock exchanges, each according to the timing of the state affiliated to it.

If you turn in a Gulf nation and desire to trade on the New York Stock Exchange, you are restrained to run between 4 pm and 11 pm, which corresponds to the timing of the opening of the New York Stock Exchange for most middle eastern countries.

Such a divergence in working hours causes many troubles and difficulties in the long term.

On the exchange of currency market and because there is no specific central office, and because operations are transmitted out by computer networks, work along the exchange does not stop the currency 24 hours.. Just market has just been off two days a week (Saturday and Sunday).. !!

Banks and financial institutions open in Japan at 12 am GMT (8 am Japan time), buying and selling begins and the Japanese institutions are closed only at 9 am (5 pm Japan time).

But the work will not stop because once the Japanese and Asian institutions are shut down and the most important ones are in Tokyo, Hong Kong and Singapore so that the European institutions and the most important in London, Frankfurt and Paris have opened their doors. , And when the American institutions close their doors to state psychiatric hospitals in Australia and New Zealand in circulation, and before closing the last doors of the Japanese institutions have begun a new day at work.. !!

 

Thus and depending on the timing of each state it will be for you to trade continuously for 24 hours.

 

Except on Saturday and Sunday.. Because it is a holiday in all nations.

 

When US institutions close on Friday at about 10 pm GMT it will be Saturday morning in Australia and New Zealand which is a holiday as you know so work stops until Sunday evening at 10 pm GMT, where Monday morning in Australia and New Zealand will be back for the next week Behind the daylight. In each country and granting to its timing to the close of the following week and so on.

 

Of course you will not mete out with all these introductions in all these countries separately, but will distribute with the forex broker company, which will unite you in turn with all other establishments across the universe.

What we are interested to know here is that currency trading goes on 24 hours a day, and this gives you the opportunity to take the time that suits you best without fear of "arriving late" in the currency market cannot get too late, Because opportunities are many and round the clock.

currency trading

Working in currency trading on the international exchange of currencies

You are today learning how profits are realized in currency trading in principle.

The principle of currency trading  is non  dissimilar from the principle of trading any other good.

The selling  and buying  of currencies between the various banks and financial institutions linked to each other through the nets, where these institutions and around the world exchange all day and night currencies, each sells and buys for his clients, which may be States or transnational corporations or people.

This is the international exchange of currencies, which we have supposed it is a stock exchange through the networks of communication, data processor and Internet OTC.

You will also be linked to this market and will be able to buy and sell currencies by contacting the broker you choose to trade  with, which will in turn receive hundreds of establishments around the globe.

Of course, you will be affiliated with the brokerage company through a special platform will provide you the currency rates and you will be able to purchase or trade these currencies through the brokerage company - through this program - to sell or buy the currency you want At a price you deem appropriate.

Now learn that there are two cases of entities that buy currencies from other nations

The first case is buying currency to be utilized as an exchange tool for trade, investment and travel.

And the second case are those who buy currencies using them as a commodity, IE to sell them and to claim advantage of the difference in price between buying and selling. These are the speculators, and you will be one of them.

In front we move farther into this exciting field, we will draw on some central concepts

Major currencies

Every bit, you know, each country possesses its own currency and the international market gives each currency a special symbol known to ease the interaction between traders without mistakes,

 

For lesson, may be similar to several countries dealing  with the dollar, is the name of the currency of the United States of America and the currency of Australia and the currency of Canada and many nations.

Thus to avoid mistakes in  trading, it is internationally agreed that the currency of each nation will be thrown its own symbol known worldwide.

 

For instance, the US dollar symbol is USD

The Canadian Dollar Symbol is CAD for Canadian Dollar

The Australian Dollar symbol is AUD for Australian dollar

Thus, for each currency a country follows its own symbol.

In principle you can perform currency trading  of any nation in the world. But trading in the currency market is mainly focused on four currencies:

 

Euro: a single European currency and EUR symbol.

 

JPY: The Japanese currency and the JPY symbol for the Japanese yen.

 

British Pound (GBP): British Pound (GBP) short of Great Britain pound.

 

CHF: Swiss currency and CHF symbol for Confidralic Helevitica Franc.

 

In the currency market, 80% of the currency trading takes place in previous four currencies.

 

But for what?

 

When you want to buy the yen what you will pay for it ?

Dealing with previous currencies is all against the US buck.

Remember, currency trading takes place in the form of pairs, when you buy a currency, you must sell - pay - against it another currency, and frailty versa.

In the currency market, when you buy the euro, you will sell the dollar against it, and when you sell the euro, you will purchase the dollar against it.

You may wonder: Why do most  transactions  take place in these four currencies? Can not buying and selling other currencies?

Answer: Have you ever remembered about moving to a cashier and asking for Thai bat? !!

If you examine it you will find it hard to get a cashier selling you Thai Baht

Why?

Because few people are able to use the Thai currency in your land.

If you proceed to the cashier to buy or sell the US dollar or the pound sterling, for instance, you will get them easily, because there are many people dealing with these currencies are acceptable not only in the United States and Britain, but from different countries in the Earth, that the demand for them is high.

 

Because the euro, the yen, the pound sterling and the US dollar are the currencies of the countries with the largest saving in the globe, and because most transactions between states and individuals are in one of these currencies.

 

As for the Swiss franc, the Swiss economy is not comparable to the deliverance of the previous four countries, but the international custom has made the Swiss economy and its franc currency a safe haven in the big international ports. You know that most of the world's rich people keep their money in Swiss banks.

And because the US dollar is the most significant of these currencies at all.

It is the principal currency for every previous four currencies.

When you buy the euro you pay the dollar and when you sell it you get a buck.

When you buy the Swiss franc you pay the dollar and when you sell it you get a buck.

As well every bit for the yen and the pound sterling.

The buck is the common currency against all currencies where each other currency is treated separately against the buck:

EUR / USD

GBP / USD

USD / JPY

USD / CHF

These four currencies are called when sold and bought against the dollar in major currencies.

Other currencies

In addition to dealing with the previous four currencies against the dollar, you can also sell and buy currencies of other countries in the currency market also against the buck such as:

USD / CAD.

AUD / USD.

Of course you can buy any currency against the dollar, for example, you can buy the Saudi riyal and sell the dollar.

But in the international currency market, the majority of speculators do not exceed the currencies we have mentioned and 80% of the deal is centered along the four major currencies against the horse.

This gives traders the advantage of centering on the currency market than other traders in other marketplaces

Crosses Currencies

You may question what if I want to purchase a currency without paying the US dollar, but I pay - sell - some other currency?

What if I wanted to buy the Euro and sell the pound sterling? Is this really possible?

Answer: Yes. We have read that you can buy and sell any currency to any other currency.

You can buy the Euro and sell the EUR / GBP.

You can buy CHF and pay a JPY / CHF interview.

Thus, you can buy any currency against any other currency without the need for the US dollar.

Currencies are called to be bought or sold against currencies other than the US Dollar in the CROSES.

The most popular currencies that are traded in the currency market are:

EUR / GBP.

EUR / JPY.

EUR / CHF.

GBP / JPY.

GBP / CHF.

However, as mentioned above, the vast majority of traders focus on buying and selling the four major currencies mainly, and some prefer to trade in some hybrid currencies.

At the beginning of your line of work, we recommend that you trade currencies by focusing only on major currencies

After you have moved on to an advanced level of knowledge and experience, you can move to Crosse  currencies.

In fact, the four major currencies with the cross currencies we mentioned earlier capture more than 95% of trading along the international currency exchange.

Base currency

We require you to pay attention to a basic level:

Now learn that the monetary value of a currency is what you must yield for some other currency.

For example: GBP / USD = 1.5

The question is the substance of the previous formula that we possess to pay $ 1.5 to obtain one pound or should we pay 1.5 pounds for one buck?

In this formula: USD / JPY = 120

Does that imply we bear to pay 120 yen for one dollar or do we possess to pay $ 120 to get one yen?

The currency whose symbol is first put in the convention is called the home currency

The cost is the sum of money needed for the defrayal of the second currency to obtain one unit of the base currency.

Remember that one..

When we said: GBP / USD = 1.5

The recipe is the sum of money needed for the defrayal of the second currency (the dollar) for one hammer (one unit of the base currency).

That is, we suffer to pay $ 1.5 for one pound.

When we say: EUR / USD =.90

The euro is first laid in the pattern. The base currency in this recipe is the euro.

 This entails that the price in the formula is the sum to be compensated from the second currency (dollar) for one euro (one unit of the base currency).

That is, we are here to pay $ 90 for one euro.

This principle applies to all currencies

Direct and indirect currencies

In the currency trading market, the euro and pound sterling are the base currencies against the dollar, and therefore are the first to be symbolized

Direct currency

As follows: EUR / USD and GBP / USD.

The price to be posed in front of either of the two previous versions is the quantity to be compensated from the dollar to get one euro or one pound.

When we say EUR / USD =.9000

This implies that you are asked to pay $ 9.000 for one euro.

When we say: GBP / USD = 1.5000

This entails that the required payment of $ 1.5000 = to get one pound.

Currencies that are the base currencies  against the US dollar and  whose symbol is placed before the dollar symbol called direct currencies

The most significant currencies in the international currency market are

EUR / USD

GBP / USD

AUD / USD

While In the currency market, if the dollar was the base currency against the yen and the Swiss franc. The dollar symbol is first laid in the formula and then the yen or franc placed. Follows: USD / JPY and USD / CHF.

When we say: USD / JPY = 120

That implies that the yen is required to pay ¥ 120 for one dollar. Since the buck is the base currency.

When we say: USD / CHF = 1.4000

That implies that the required payment of the franc = 1.4000 to obtain one dollar.

The currencies against which the dollar is denominated are the base currency of the indirect currencies

Indirect currencies

Are the currencies in which the dollar symbol is placed before it and the dollar is the base currency

The most significant currencies in the international currency trading market are

USD / JPY

USD/ CHF

USD/CAD

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