What is being traded in the Forex? This is a common question with an obvious answer. Currencies are being traded-in Forex but you are not buying anything. This concept is a bit confusing but you need to know and understand these basic things before getting into the trading game.
Think of Forex as buying a share from a certain company. Most of the time, the currency’s price is the direct reflection of the opinion of the market when it comes to the current and future health of the economy. When you trade forex, you buy a currency, for instance, the United States dollar, you are actually purchasing a “share” of the United States economy. You are actually betting that the economy of the United States will do well and will be doing well for the next years to come.
By the time you sell those “shares” to the market, you are hoping to get some profit out of it. So, generally speaking, the exchange rate of one country versus the other reflects the condition of their economy. Always remember to use reliable trading indicators like Parabolic SAR to determine the movement of currencies in the market.
Major Currencies
There are potentially a good number of “major currencies” that you can trade in the Forex market. These major currencies are the most traded since they belong to the world’s largest economies. But then, Forex traders tend to choose their own “major currencies” based on their bias. But probably, these four currencies are the most preferred ones – USD, JPY, EUR, CHF, and GBP. While commodity currencies are CAD, AUD, and NZD.
Here are the most traded currencies in Forex trading with their code, country, currency, and nickname.
USD
Country – United States
Currency – Dollar
Nickname – Buck
EUR
Country – Eurozone
Currency – Euro
Nickname – Fiber
JPY
Country – Japan
Currency – Yen
Nickname – Yen
GBP
Country – Great Britain
Currency – Pound
Nickname – Cable
CHF
Country – Switzerland
Currency – Franc
Nickname – Swissy
CAD
Country – Canada
Currency – Dollar
Nickname – Loonie
AUD
Country – Australia
Currency – Dollar
Nickname – Aussie
NZD
Country – New Zealand
Currency – Dollar
Nickname – Kiwi
Currency symbols are mainly composed of three letters, the first two letters are from the name of their country while the third letter is the currency of their country. These three letters of your currency are called ISO 4217 Currency Codes. In 1973, the International Organization for Standardization (ISO) established these codes for currencies that are being used nowadays.
Since USD has been very popular in the Forex market, it was given other nicknames aside from “buck”. It is also called cash money, greenbacks, dead presidents, bones, moolah, benjis, bread, benjamins, cheese, cheddar, scrilla, paper, and loot.
For so many years, the Forex market has been considered as a global market where two currencies can be traded against one another. If you predict that one currency can become stronger than the other, then your predictions end up correct, you can make some profit. This is what happens when you trade forex. It is global and a market where the different currencies of the world change hands. So, to make a profit in FX trading, one must predict the movement of the currency through the use of indicators like Parabolic SAR.
