Currency Pairs - Their Purpose In The Currency Market
The fastest growing form of online investment nowadays is undoubtedly the currency trading market. Those looking outside the realm of traditional investments such as the bonds market have been flocking to the currency markets. Let us look at the currencies themselves to better comprehend the currency markets.
All currencies on the currency exchange markets come in the type of a pair. As soon as you buy or sell a currency pair, you are essentially buying a currency and selling another. Nicknames are given to the a large amount normally traded pairs. The a large amount common nicknames consist of Fiber (Euro/Usd), Swissy (Usd/Swiss Franc) and the cable (Pound/Usd). Currency pairs that see the a large amount trading are practically always one of the major pairs such as Eur/Usd, Australian and New Zealand crosses as well as the Yen crosses. Pairs outside the scope of the majors are usually termed exotic currencies, currencies like the Usd/MXN, Usd/HUf and the Eur/Zar. Spreads ranging from high to extremely high are the hallmark of exotic pairs.
When you buy the Eur/Usd currency pair, you are in fact buying the Euro and selling the American dollar. Assuming you bought a currency pair, the appreciation of the first currency in the pair means a profit for you. If you sold a pair, your profits are gained from the depreciation of the base currency against the quote currency. This is the primary method of earning a profit or making a loss from a currency pair.
Finding a broker that offers exotic pairs is difficult a most of the interest in this industry are on the major pairs. Forex brokers that do offer exotics normally charge very high spreads per trade. The spreads charged per currency pair differs from broker to broker. Commonly traded pairs such as the eur/usd normally have lower spreads by the top forex brokers due to the competitive nature of the industry. Ultimately, a forex broker with low spreads and a good reputation will be able to attract more traders.
While there are a wide mixture of brokers offering their services online, the a good number general brokers are made up of Fxcm, Interbankfx and Oanda. All these broker have been in the business for years and are dependable with fairly low spreads. Oanda holds the honor of offering the largest variety of currency pairs in this group. But they are all exceptional forex brokers should you be looking for an online currency broker.
All currencies on the currency exchange markets come in the type of a pair. As soon as you buy or sell a currency pair, you are essentially buying a currency and selling another. Nicknames are given to the a large amount normally traded pairs. The a large amount common nicknames consist of Fiber (Euro/Usd), Swissy (Usd/Swiss Franc) and the cable (Pound/Usd). Currency pairs that see the a large amount trading are practically always one of the major pairs such as Eur/Usd, Australian and New Zealand crosses as well as the Yen crosses. Pairs outside the scope of the majors are usually termed exotic currencies, currencies like the Usd/MXN, Usd/HUf and the Eur/Zar. Spreads ranging from high to extremely high are the hallmark of exotic pairs.
When you buy the Eur/Usd currency pair, you are in fact buying the Euro and selling the American dollar. Assuming you bought a currency pair, the appreciation of the first currency in the pair means a profit for you. If you sold a pair, your profits are gained from the depreciation of the base currency against the quote currency. This is the primary method of earning a profit or making a loss from a currency pair.
Finding a broker that offers exotic pairs is difficult a most of the interest in this industry are on the major pairs. Forex brokers that do offer exotics normally charge very high spreads per trade. The spreads charged per currency pair differs from broker to broker. Commonly traded pairs such as the eur/usd normally have lower spreads by the top forex brokers due to the competitive nature of the industry. Ultimately, a forex broker with low spreads and a good reputation will be able to attract more traders.
While there are a wide mixture of brokers offering their services online, the a good number general brokers are made up of Fxcm, Interbankfx and Oanda. All these broker have been in the business for years and are dependable with fairly low spreads. Oanda holds the honor of offering the largest variety of currency pairs in this group. But they are all exceptional forex brokers should you be looking for an online currency broker.
About the Author:
The Forex Trading Market as well as the Currency Exchange Market have been one of the areas that the author specializes in. Rueben Gomez has been in the forex trading markets for more than 7 years. His goal is to share his knowledge on the topic whever he can.