The Seven Most Traded Currencies in FOREX

Currencies throughout the world are normally traded in US dollar amounts technically called as “lots”. Where one lot is equal to $1,000, which controls $100,000 in currency. This contolling of currencies is known as the "margin". With its help you can control $100,000 worth of currency for only 1,000 dollars. This is what is called “High Leverage”.

Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. This example is just an analogy for the reader to understand the terms that are used frequently in forex trading here ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.
Here are some of the common symbols used in the Forex:

• USD - The US Dollar
• EUR - The currency of the European Union "EURO"
• GBP - The British Pound
• JPN - The Japanese Yen
• CHF - The Swiss Franc
• AUD - The Australian Dollar
• CAD - The Canadian Dollar

There are symbols for other currencies as well, but these are the seven most commonly traded currencies in forex market.
As stated before a currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible. Some of the common PAIRS are:
EUR/USD - EUR/JPY - USD/JPY - GBP/USD - USD/CAD - AUD/USD - USD/CHF

The listed currency pairs above look like a fraction. The currency synbol written on the left of the fraction is called the base currency whereas the symbol written on the right on the fraction is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency. All you need to trade in forex and to understand the Fundamental Analysis issues is to be aware of the base/counter concept.
So why is it important to know about the base/counter currency? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some think that short-selling was restricted in the stock market *(Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions.
You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money either the market is going up or down.

Why to trade Forex

Forex trading is by far the most speculating type of business activity, many people question that why it is beneficial to trade in forex or what is the advantage of trading forex. Some of the theme benifits of forex trading are as under.

• 24 Hour Trading
  One of the major advantages of trading Forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). This gives you a unique opportunity to react instantly to the breaking news or pay rolls that are affecting the world markets.
• Superior liquidity
  Another advantage of the forex market is that it is so liquid that there are always buyers and sellers to trade with. The liquidity of this market, especially that of the major currencies, helps ensure price stability and narrow spreads. The liquidity comes mainly from banks that provide liquidity to investors, companies, institutions and other currency market players.
• No Commissions
  The fact that Forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis. Trading the “majors” is also cheaper than trading other cross because of the high level of liquidity.
• 100:1 Leverage
  Leverage (gearing) enables you to hold a position worth up to 100 times more than your margin deposit. For example, a USD 10,000 deposit can command positions of up to USD 1,000,000 through leverage. You can leverage the first USD 25,000 of your investment up to 100 times and additional collateral up to 50 times.
• Profit potential in falling markets
  Since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. When you trade currencies, they literally work against each other. If the EURUSD declines, for example, it is because the US dollar gets stronger against the euro and vice versa. So, if you think the EURUSD will decline (that is, that the euro will weaken versus the dollar), you would sell EUR now and then later you buy euro back at a lower price. In case that the EURUSD indeed declines, then you can take your profit. The opposite trading scenario would occur if the EURUSD appreciates.

Forex Trading a Brief Introduction

Foreign exchange,Forex or just FX are all the terms used to describe the trading of the world currencies whether it is dollar a pound, a riyal or a dinar. The Forex or the forex market is the largest market in the world, with a gross trading amounting to more than 3 trillion US dollars a day. Trader’s purpose on the Forex is to get profit as the result of foreign currencies purchase and sale. The exchange rates of all currencies being in the market turnover are permanently changing under the action of the demand and supply alteration.
Unlike trading of stock market, the Forex market is not conducted by a central exchange, rather forex market is conducted by the “interbank” market. Trading actually takes place directly between the two counterparts necessary to make a trade, whether over the telephone line or on electronic networks that are present all over the world. Using these fluctuations in accordance with a known principle “buy cheaper – sell higher” traders obtain gains.
Just as on any other market the trading on Forex, along with an exclusively high potential profitability, is essentially risky. It is possible to gain a success on it after a certain training including a familiarization with the structure and kinds of Forex, the principles of currencies price formation, the factors affecting prices alterations and trading risks levels, techniques of the analysis and prediction of the market movements as well as with the trading tools and rules.
An another important role in the process of the preparation for trading Forex belongs to the demo-trading (that is to trade using a demo-account with some virtual money), which allows to testify all the theoretical knowledge and to obtain a required minimum of the trade experience not being subjected to a material damage.
The main centres for forex trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centres actually makes the market open 24 hours a day thus allowing the traders to trade non stop or trade at their leisure times.