Candlestick Trading Blog

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To trade currencies means to trade in the forex markets. Forex is a market in which the currency of one country is compared to the currency of another country to determine the value. The value of foreign currencies is what is traded when forex trading. Also known as the Foreign Exchange, currency trading is and has been very appealing to investors due to it liquidity. A nation’s currency contains value when compared to another nation’s currency and as the investor learns that there are pairs of currency that are traded 85% of the total volume. For instance to trade the U.S. dollar, you must choose another currency to trade it against. The reason that the major currency pairs account for 85% of all of the forex trades in the world is because the strongest economies are most often the most stable economies and they come from stable governments. The security and the strength of these economies is what makes these currencies the strongest and the best currency pairs to trade.

The major currency pairs when trading forex include the following:

1) US Dollar (USD) and Japanese Yen (JPY)
2) Euro (EUR) and USD
3) USD and the Swiss Franc (CHF)
4) USD and Canadian Dollar (CAD)
5) Australian Dollar (AUD) and the USD
6) British Pound and the USD

Many investors prefer to trade currencies instead of trading stock for a variety of reasons. First of all, when stock trading, there are commission fees and with currencies trading, there are no commissions. The only fees include the bid or ask spreads. Secondly, forex is now open to anyone and there is no longer a need for a forex investor to have a large sum of money to start with. Third, the internet allows online currency trading so that you no longer have to work for a large bank or large company to partake in this type of trading. Additionally, there is now more focus on what currencies to trade when comparing it to deciding on over 5000 stocks to choose from. Lastly, currency trading can be done 24 hours a day, 5 days a week from anywhere that you can establish an internet connection. Many investors prefer this type of trading due to the flexibility it offers.

In addition to the flexibility of trading currency, this market trades over USD 2 trillion each day. This compared to the USD 50 billion each day on the New York Stock Exchange. The margins may be low when forex currency trading, but the large number of investors certainly make up for it. Basically, when you make a profit and you invested a rather significant amount, you can cash in on a very high profit.

There is a lot more to learn to be able to trade currencies successfully. Continue to research this method of investing and see if it is one that works for you.