The largest and most popular financial market in the world is the foreign exchange (forex) market.
Its prominence perhaps lies in its broad appeal and the number and diversity of participants it attracts; from the world’s heavyweight commercial banks, hedge fund managers, right down to the individual.
Another reason why the popularity of forex has taken off is the increasing amount of access points to this lucrative market such as spread betting and CFD providers.
It’s possible to just dive in and get lucky at forex trading but the chances of this success continuing and you making a long-term career out of forex is unlikely without you having a significant depth of knowledge of currencies.
It’s a good idea to start with the currency you know most about and use this as base to expand your knowledge of how it relates to other currencies.
A significant amount of total trade volume is always on the ‘majors’, which are: EUR/USD (Euro/US Dollar), GBP/USD (Pound/US Dollar), USD/JPY (US Dollar/Yen), and USD/CAD (US Dollar/Canadian Dollar).
Examples of ‘minor’ forex pairs are: CHF/JPY (Swiss franc/Japanese yen) and EUR/DKK (Euro/Danish Krone).
It’s also key to know what kind of news and events will influence a country’s currency.
Traders and investors will study the economic situation of an individual country quite closely by waiting for the publishing of the latest economic indicator.
And these include inflation and interest rates figures, GDP and consumer sentiment surveys.
Keeping up-to-date with all the movements on the financial markets can be difficult at first. That’s why CFD trading company IG Markets has a huge range of free resources, available on its website, for beginner and experienced alike.
Remember that financial CFD trading is a leveraged product and can result in losses that exceed your initial deposit.
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Tags: forex, forex trading, spread betting