What Currencies Can Be Traded At Forex Trading
Dealers in most companies work mainly in US dollars, and very rarely in any other world leading or national currency. It is essential to understand one very important thing: if your forex trading account is in dollars, it doesn’t mean that you can only make deals when a currency is being bought for dollars. It may seem paradoxical, but you may buy dollars for some other currency which you, naturally, don’t have in your dollar forex trading account. For example, you may buy dollars for Euros. Such deals are made when the euro rate is expected to fall to the dollar and is called “buy dollar against euro”. You may even make a deal where the dollar is not present at all, e.g. buy Japanese yen against Swiss francs. Your forex trading account is debited in dollars in an amount equivalent to the cost of the deal, and the currency is automatically converted at the current exchange rate.
Most of the world’s currency market is made up of the following currencies:
US dollar – USD;
Euro – EUR;
British pound of sterling– GBP;
Japanese yen– JPY;
Swiss franc – CHF.
These currencies are the most popular for Forex trading market. We have already stated that when the trader buys a currency, he does not buy Euros or British pounds, but a currency pair, e.g. euro-dollar (EURUSD), which means that he buys Euros for dollars. In this example, the euro is the base currency and the dollar is the quote currency. We say “buy euro-dollar”, “sell euro-dollar”. The most popular currency pairs are in forex trading: EURUSD, GBPUSD, USDCHF and USDJPY.
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