|
|
|
|
|
|
|
|
|
The Seven Most Traded Currencies in FOREX.
Currencies are traded in dollar amounts called "lots". One lot is equal to $1,000, which controls $100,000 in currency. This is what is known as the "margin". You can control $100,000 worth of currency for only 1,000 dollars. This is what is called "High Leverage".
Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.
Here are some of the common symbols used in the Forex:
USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound
JPN - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar
There are symbols for other currencies as well, but these are the most commonly traded ones.
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.
Some of the common PAIRS are:
EUR/USD Euro / US Dollar
"Euro"
USD/JPY US Dollar / Japanese Yen
"Dollar Yen"
GBP/USD British Pound / US Dollar
"Cable"
USD/CAD US Dollar / Canadian Dollar
"Dollar Canada"
AUD/USD Australian Dollar/US Dollar
"Aussie Dollar"
USD/CHF US Dollar / Swiss Franc
"Swissy"
EUR/JPY Euro / Japanese Yen
"Euro Yen"
The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the /however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.
If this seems confusing then you're in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.
So why is it important to know about the base/counter currency? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market *(Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions.
You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.
Omar Vargas; FOREX Trader and Freelance writer.
http://www.1-forex.com
Better Links Directory There are many types of investment methodology out there. All... Read More Profitable day traders recognize that momentum trading is among the... Read More You know the old joke:"How do you make a million... Read More It is possible to buy and sell money from different... Read More With every passing year the interest in electronic trading is... Read More The recent upheavals in the world financial markets were quelled... Read More What Is Commodity Trading?Commodity futures markets allow commercial producers and... Read More The psychological aspect of trading is usually underestimated by those... Read More RULE #1) ~ Cut your losers; let your winners ride.One... Read More As 90-95% of new forex traders lose money within the... Read More "FX" is an abbreviation of "forex" or "foreign exchange." Foreign... Read More Currencies are traded in dollar amounts called "lots". At 100:1... Read More A broker is any person or firm that charges a... Read More What Is Online Futures Trading?A futures contract is an agreement... Read More During my first year as a local (independent trader) on... Read More Many Americans are interested in getting involved in forex trading.... Read More There is one very important factor that you should consider... Read More If you want to be a successful trader, you must... Read More Profitable day traders recognize that momentum trading is among the... Read More There are many advantages to Trading FOREX as your main... Read More What is Options Trading?An option is simply granting someone the... Read More All professional traders have a trading plan. Trading futures is... Read More What is Forex Trading?Forex, or Foreign Exchange, is the simultaneous... Read More I am reading a fantastic book on trading, first published... Read More One way to acquire discipline in trading..."Hey Joe! When you... Read More
Discovering Turnaround Candidates
Day Trading Course or Day Trading Technique Seminar: Learn Day Trading Education
Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.
Forex Currency Trading
Internet and Computer Systems in the FOREX Business
Financial Crises, Global Capital Flows and the International Financial Architecture
Commodity Trading - Advantages and Disadvantages
Psychology Of Trading
Two Timeless Rules in FOREX Investing
5 Questions You Need To Have Answered Before You Back-Test Your Forex System
Forex Market Overview
How Currencies are Traded in the FOREX Market
Forex Broker
Online Futures Trading - Advantages and Disadvantages
What I Learnt Losing £60,000 My First Year as a Full-time Trader
Getting a Forex Trading Education
The Meaning of FOREX Price Charts and How to Use Them
Dont Deny Reality
Stock Market Report: Day Trading or Swing Trading Online? Stock Investing Information
Advantages of Trading FOREX Over Stocks and Commodities
Options Trading - Advantages and Disadvantages
Writing A Trading Plan
Forex Trading - Advantages and Disadvantages
The Yin and the Yang of Markets
Ways to Acquire Discipline in Trading
List of featured sites for sale
Choosing A Forex Broker
With currency trading becoming ever more popular, the number of... Read More
How To Handle A String Of Losses
Everybody hates to lose and unfortunately no one is blessed... Read More
Internet and Computer Systems in the FOREX Business
With every passing year the interest in electronic trading is... Read More
5 Questions You Need To Have Answered Before You Back-Test Your Forex System
As 90-95% of new forex traders lose money within the... Read More
Forex Profits
The Forex Market-What, When and Why?Forex, FX and the Forex... Read More
The Meaning of FOREX Price Charts and How to Use Them
There is one very important factor that you should consider... Read More
Is The U.S. Dollar About To Reverse Course?
For the first time in several years the U.S. dollar... Read More
The Secrets of the Super-Traders
The first and perhaps most important "secret" is to realize... Read More
Forex Scams: How to Spot Them A Mile Away
In recent years, investors have witnessed increased number of investment... Read More
Trade Exit - How To Cut Losses And Let Profits Run
Cut your losses short and let your profits run. This... Read More
Getting a Forex Trading Education
Many Americans are interested in getting involved in forex trading.... Read More
E-currency Exchange Trading
If you are reading this article you are probably one... Read More
Chinas New Currency Regime
The base unit for the renminbi is the yuan, which... Read More
Exploring the World of Day Trading
Are you looking into a career in day trading? In... Read More
Forex Brokers - Helping to Maximize Your Success
A Forex broker is a broker dealing in foreign exchange,... Read More
Forex Signal Services
What are Forex signals? Forex signals are paid services offered... Read More
Why Forex Traders Plan To Fail Before They Even Place Their First Trade & How You Can Know It & ...
Have you heard the wise saying that a trader who... Read More
The Miracle of Forex
My father, who owns a small parts store and garage... Read More
The Yin and the Yang of Markets
I am reading a fantastic book on trading, first published... Read More
Disgruntled
The following situation happens quite often to many traders. Look... Read More
Day Trading Success- The Key Is Survival
Most new traders tend to focus just about all their... Read More
Momentum Trading: A Practical Day Trading Strategy to Get Profits from Hot Stocks
Momentum day trading can be extremely profitable when done correctly...Day... Read More
Factors Influencing a Currency Pair Exchange Rate
IntroductionThe exchange rate refers to the value of the US... Read More
Trading Profitably on the Foreign Exchange Market
You may be asking yourself "how does one begin to... Read More
Stopping Yourself
I read on a bulletin board a traders comment that... Read More
Currency Trading Currency Trading |