Easy to trade currencies
Currency rates are in constant fluctuations.
However, many people are not aware that there is actually a market called the Foreign Exchange market where you can
benefit from these fluctuating rates. Learn more about currencies and what we have to offer below.
Currency trading in Forex
Currency trading or Foreign Exchange (Forex) market, is one of the most fast paced and exciting market. Being the largest investment market, Forex has a daily currency trading volume of around $5 trillion.
Currency trading is done in pairs. For example, EUR/USD, where the Euro is called the base currency and the US dollar is called the quote currency. To make a Forex quote, the base currency is assessed against the quoted currency. What is interesting about currency trading is that it doesn’t require big money to start trading.
Why trade currencies?
24 hour trading
The Forex market is open 24 hours a day a 5 days a week. Therefore traders are able to trade currencies at the time that suits them.
Profit from both direction
Traders don’t have to care about the direction a particular currency is going as with currency trading, they are able to make money regardless of whether the market is going up or down.
Low trading costs
Currency trading requires a low initial investment. Most brokers accept a minimum invest of $250 and the minimum required margin to start trading currencies at Trader.Online stands at only $25.
Leverage enables traders with low capital to trade high volumes of currencies and are thus able to make significant profits from the smallest moves on the market.
Traders can easily make use of tools available on the platform to analyse trends and set a winning strategy. Analysis can include currency charts but also economic and political events.
What factors influence currency in Forex?
The cornerstone of any Forex trader are economic reports. The market moves quickly which is why it is crucial for traders who are here to stay have to
maintain an economic report calendar. The most important important economic news to look for are as follows:
Gross Domestic Product (GDP)
GDP measures the total output of goods and services produced by an economy. GDP is a lagging indicator which means that it reports only trends and events that have already occured.
Inflation measures the increase in price of goods and services and also send signals about falls in purchasing power. However, inflation can be regarded as having two faces. Retreating purchasing power can be viewed as putting downward pressure on a currency but it can also force central banks to increase its rates to control rising inflation and as a result causes currency appreciation.
In currency trading, these are the 2 most important economic releases to look for. Other reports that can be beneficial to a currency trader are reports such as
changes in interest rates, employment levels, retail sales and manufacturing indexes.
What are the major currency pairs?
Majority of Forex traders tend to settle for these major pairs:
Trading opportunities for the EUR/USD are almost impossible. However traders still trade this pair as it is the most liquid pair and offers very low bid-ask spreads which can create opportunities for profit.
This pair features relatively low bid-ask spreads and is also very liquid. As a result, it is a great pair to trade for new traders as well as for more experienced traders.
The liquidity and availability of various trading instrument is what makes the GBP/USD a great pair to trade for traders who are just getting started with currency trading on the Forex market.
The AUD/USD pair also referred to as a commodity pairing as it involves a country having raw materials in large quantities. The liquidity of this pair is very appealing to intraday traders who are looking to implement strategies aimed at profiting from short-term exchange rate fluctuations.
The USD/CHF is the abbreviation for U.S dollar and Swiss francs. In currency trading, this pair is frequently traded in times of political tensions or uncertainty.
Due to large amount of trading, this pair is considered to be very liquid. The Canadian dollar has generally reflected the US dollar’s own movements, rising against the US dollar while simultaneously falling against other international currencies and vice versa.
The relationship between Japan and EU countries makes it favourable for traders to trade this currency pair. This pair has low spreads, high volatility and directional predictability which makes it easy to profit from trading.
The EUR/GBP holds a strong position among the top 8 major currencies. Due to a relatively low volatility, this pair is very stable and offers several benefits to traders. The EUR/USD has frequent long periods of falling or rising trends with little fluctuation in between.