The currency exchange market, which move every day more than four trillion dollars, is undoubtedly the most important and most liquid in the world. Currencies with which normally operates more are the US dollar, euro, Japanese yen, British pound, Swiss franc, Canadian dollar, Australian dollar and New Zealand dollar. It operates with currency pairs, and most commonly operated pair difference is Euro-Dollar (EUR / USD). The pair tells you how many US dollars (the quote currency) are needed to buy one euro (base currency).
The currency exchange operations are very popular because of many reasons, but the main ones are:
Liquidity: the market is so big that you'll never requoted or stuck in a negotiation, which is of great importance for strategic orders.
Market open twenty-four hours as over the counter operates so you will not have to wait for opening time.
Market size: no individual player can get to monopolize the EUR / USD market.
Leverage: due to the volume of operations, agents usually offer the highest levels of leverage in the currency market.
operational opportunities with micro lots: can operate with only ten cents per pip, so just need individual capital.
Free online resources available to help you in your training.
FAdemás, unlike what happens with commodities, indices and stocks, foreign exchange transactions are not connected to bullish or bearish markets, which leads to unique operational opportunities. For example, they are not directly related to stock indices or commodities.
The main participants in this market are decentralized and OTC large and small banks, governments, brokers (ECNs and market makers), hedge funds, large commercial and retail companies like you.
Operating in the currency market you have to understand that there are a lot of factors contributing to the current market price of each particular instrument, among which include the following:
Fiscal and monetary policies of the respective countries or currency areas.
Indicators or economic announcements as the non-farm payroll or payroll nonfarm US jobs, consumer price index, retail sales, industrial production and personal consumption.
The price of the goods. For example, the fact that the gold price is low may indicate that the dollar is high.
Global economic development.
Financial markets in the respective currency areas.
Government bonds.
For each currency pair the above factors affect both. Often traders also speculate with strong currencies like the Swiss franc (CHF) to profit from a given economic uncertainty in a particular region.
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