Trading concept
What is Forex?
To put this into perspective, the U.S. stock market trades around $257 billion a day; quite a large sum, but only a fraction of what forex trades.
Forex is traded 24 hours a day, 5 days a week across by banks, institutions and individual traders worldwide. Unlike other financial markets, there is no centralized marketplace for forex, currencies trade over the counter in whatever market is open at that time.
How FX Trading works
Trading forex involves the buying of one currency and simultaneous selling of another. In forex, traders attempt to profit by buying and selling currencies by actively speculating on the direction currencies are likely to take in the future.
World’s Major Currencies
| COUNTRY | SYMBOL | COUNTRY | SYMBOL |
|---|---|---|---|
| United States | USD | Switzerland | CHF |
| Eurozone | EUR | Canada | CAD |
| Japan | JPY | Australia | AUD |
| Great Britain | GBP | New Zealand | NZD |
Want to know more about how to trade forex?
Our free Let’s Get to Know Forex guide will cover how to get started, help you make your first trades and outline how to create a long-term trading plan for long-term success.
Which currencies can I trade?
Typically referred to as “The Majors”, these seven currency pairs make up almost 80% of total daily trading volume*. As you’ll see in the table below, the major currency pairs all include the U.S. Dollar (USD).
Major Currency Pairs
| DESCRIPTION | SYMBOL | NICKNAME |
|---|---|---|
| Euro/U.S. Dollar | EUR/USD | Euro |
| Great British Pound/US Dollar | GBP/USD | CABLE |
| U.S. Dollar/Japanese Yen | USD/JPY | YEN |
| U.S. Dollar/Swiss Franc | USD/CHF | SWISSY |
| U.S. Dollar/Canadian Dollar | USD/CAD | LOONIE |
| Australian Dollar/U.S. Dollar | AUD/USD | AUSSIE |
| New Zealand Dollar/U.S. Dollar | NZD/USD | KIWI |
Minor Currency Pairs
While the major currency pairs make up the majority of the market, you shouldn’t ignore the minors – also referred to as Cross Currency Pairs. The minor currency pairs account for all the other combination of major markets such as; EUR/GBP, EUR/CHF and GBP/JPY.
With so many options available, you’re probably asking yourself – which currencies should I trade? A good rule of thumb for traders new to the market is to focus on one or two currency pairs.
Generally, traders will choose to trade the EUR/USD or USD/JPY because there is so much information and resources available about the underlying economies. Not surprisingly, these two pairs make up much of global daily volume.
