What are the essential currencies every trader should know?
Being a trader on the financial markets presents several different options and specialisms. One of the major markets that traders get involved with is the Foreign Exchange (or Forex) market. This is a massive market that sees $5.3 trillion traded every day and a trading volume that is bigger than even the New York Stock Exchange!
Trading on the Forex market involves opening a Buy or Sell trade on a particular currency pair. If you believe the price of the pair will go up, then you would open a Buy (or long) trade. If you think it will drop, you would open a Sell (or short) trade. You make your money if the price heads the way you have predicted it would.
Know your currencies
For all traders on the global financial markets it is worth knowing about the major currencies that are involved. The essential currencies to know about are:
the greenback is easily THE most important currency on the world markets. This is because it is a global reserve currency which most other countries hold a stash of in case they need it. The US Dollar is also the most traded currency, amounting for almost 50% of trades on the global currency market.
if the US Dollar is the Gold medal winner in terms of currency then the Euro is a close second. Much of this is down to the fact that the old German currency it effectively took over from was also a reserve currency in Europe, as the US Dollar was around the world.
the Japanese economy is worth almost $7 trillion and their currency, the Yen, is seen as a stable one. Originally coming into play in 1871, it was initially fixed in price to silver and gold.
this once held the lofty position that the US Dollar has today. During the 19th and early 20th Century, the British Pound was the de facto reserve currency across much of the world. While this has lessened since then, Sterling still remains a key currency with around 10% of all trades containing it.
Trading news is key as well
Any successful trader will know that keeping up with the latest news is vital for success. Whether it is the latest FX news or stories around share prices, your investments, if they are to flourish, will rely on this. If you hold stocks in your portfolio alongside currency, then The Hammerstone stock analysis is a superb resource for all the latest news releases you need to stay updated.
Trading is simple when you know your stuff
What this article shows is that the real secret with trading the financial markets comes down to having the right knowledge and latest news. With this in place, you will be able to find the right trades to make, and also have the knowledge of which currencies are most likely to move, and in which direction. It is essential to not only cover all these basic areas but also to keep on learning as you continue your trading journey.