Currencies are traded for hedging and speculative purposes. Various market participants such as individuals, corporations, and institutions trade forex for one or both currency exchange reasons.
Corporate treasurers, private individuals and investors have currency exposures during the the regular course of business. The FXTrade Platform is an ideal platform to hedge any such exposure. An investor, who has bought a European stock and expects the EUR exchange rate to decline, can hedge his currency exposure by selling the EUR against the currency exchange toronto USD.
Currency markets are ideally suited for speculative trading. The foreign exchange market has a daily volume in excess of 1.5 trillion USD, which is 50 times the size of the transaction volume of all the equity markets taken together. This makes the foreign exchange market, by far, the most liquid and efficient financial market of the world. Thanks to its efficiency, there is little or no slippage of market price for the execution of even large buy and sell orders. Traders are able to take advantage of intra-day volatility thanks to the low spreads and enter positions for short time periods, such as minutes and hours. Unlike equity trading, where restrictions limit a trader’s ability to profit from a market down turn, there are no such constraints on currency trading. Currency traders can take advantage of both up and down trends thus increasing their profit potential.
The most commonly traded currencies are: USD, EUR, JPY, GBP, CHF, CAD and AUD.
The most commonly traded currency pair is EUR/USD.
Forex Symbol Guide
Symbol Currency Pair Trading Terminology
GBP/USD British Pound / US Dollar “Cable”
EUR/USD Euro / US Dollar “Euro”
USD/JPY US Dollar / Japanese Yen “Dollar Yen”
USD/CHF US Dollar / Swiss Franc “Dollar Swiss”, or “Swissy”
USD/CAD US Dollar / Canadian Dollar “Dollar Canada”
AUD/USD Australian Dollar / US Dollar “Aussie Dollar”
EUR/GBP Euro / British Pound “Euro Sterling”
EUR/JPY Euro / Japanese Yen “Euro Yen”
EUR/CHF Euro / Swiss Franc “Euro Swiss”
GBP/CHF British Pound / Swiss Franc “Sterling Swiss”
GBP/JPY British Pound / Japanese Yen “Sterling Yen”
CHF/JPY Swiss Franc / Japanese Yen “Swiss Yen”
NZD/USD New Zealand Dollar / US Dollar “New Zealand Dollar” or “Kiwi”
USD/ZAR US Dollar / South African Rand “Dollar Zar” or “South African Rand”
GLD/USD Spot Gold “Gold”
SLV/USD Spot Silver “Silver”
All currencies are assigned an International Standards Organization (ISO) code abbreviation. In currency trading, these codes are often used to express which specific currencies make up a currency pair. For example, USD/JPY refers to two currencies: the US Dollar and the Japanese Yen.