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Which Currencies are Traded and What are You Really Trading in the Forex Market?

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What are You Really Trading in the Forex Market?

First, lets understand what we are actually doing when trading in the Forex market. What are you really selling or buying in this market? The short answer is, you are not buying or selling anything, you are speculating. All trades exist simply as data in a computer. The retail FX market is purely a speculative market, 80% of trades in the currency market are speculative in nature. No physical exchange of currencies ever takes place.

  • While all transactions are simply computer entries, the consequences are no less real.
  • Because currencies always trade in pairs, when a trader makes a trade he or she is always long one currency and short the other.

Which Currencies are Traded in the Forex Market?

Although some Forex Brokers trade exotic currencies such as the Thai baht or the Czech koruna, in general, the eight most traded currencies (in no specific order) are the U.S. dollar (USD), the Euro (EUR), the Japanese yen (JPY), the British pound (GBP), the Australian dollar (AUD), the Swiss franc (CHF), the Canadian dollar (CAD), and the New Zealand dollar (NZD).

Currencies Must be Traded in Pairs on the Forex Market

Currencies must be traded in pairs and there are about 18 currency pairs that are conventionally quoted by Forex market makers as a result of their overall liquidity. These pairs are:

<td >EUR/USD

USD/CAD

EUR/JPY

EUR/CHF

USD/CHF

EUR/GBP

GBP/USD

AUD/CAD

NZD/USD

GBP/CHF

AUD/USD

GBP/JPY

USD/JPY

CHF/JPY

EUR/CAD

AUD/JPY

EUR/AUD

AUD/NZD

These 18 currency pairs, along with their various combinations account for more than 95% of all speculative trading in FX.

 

Most traded Forex currencies

Most traded Forex currencies
Source: http://en.wikipedia.org/wiki/Foreign_exchange_market

 

Which Currencies are Traded and What are You Really Trading in the Forex Market Conclusion

If you need to find a good Forex Broker, VPS or robot then you should find these articles helpful, Recommended Forex Brokers, Recommended Forex Virtual Private Servers (VPS) and Forex Auto-Trading Robots. All of the Forex brokers listed also provide FREE practice areas for yourself and your robot once registered.

  • P.S. FxPRIMUS also offer another industry first with 60 days FREE access to 1-on-1 live personal coaching, SMS trade alerts, tutorial videos and more inside FxPRIMUS Coach.

Well, I hope you found something useful and enjoyed this article, Which Currencies are Traded and What are You Really Trading in the Forex Market. Don’t forget to let me have your thoughts in the comment box below. See you soon.


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  One Response to “Which Currencies are Traded and What are You Really Trading in the Forex Market?”

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