Trading Currency Introduction
Trading Currency means the simultaneous buying of one currency and selling of another.
This process is carried out on the foreign exchange market, which is an electronic market that exists between a network of banks and not an actual market in the physical sense.
The FOReign EXchange market is commonly abbreviated to the term FOREX. Daily FOREX trading volumes can be around $3 trillion, making it the most liquid and largest trading market in the world. This makes it around 50 times larger than the New York Stock Exchange! Trading currency is also carried out on a true 24-hour market as there are always buyers and sellers around the world trading in foreign currency.
With the recent advances in Internet technology, trading currency markets have become available to any individual around the world with access to the Internet. The FOREX market is no longer a place where only large banks and institutions can trade. Many investors are now trading currency instead of more traditional stocks and shares as a way of making money. The most obvious reasons are that there are many less currencies to trade in over the thousands of companies to invest in and the FOREX market is always open so people can trade when they are not at work.
Due to the higher liquidity of the FOREX market, trading currency incurs much lower costs than using a stock broker to trade in stocks and shares.
Trading currency is essentially carried out by trading in pairs as the trader is buying one currency and selling another. The exchange rate between a currency pair is quoted in the following way: GBP/USD 1.5750. This means that 1 GBP is worth 1.5750 USD
The first currency is known as the base currency and the second is known as the quote currency. The value shown is how much of the quote currency can be exchanged for 1 unit of base currency.
If you decide that trading currency on the FOREX market is for you, you will need to learn the correct techniques and tactics. If you do this you will discover that there are immense profits to be made trading currency on the FOREX markets.