3. Forex Is Traded 24 Hours A Day, 5 Days A
Week
The foreign exchange market – also known as forex or
the FX market – is the world’s most traded market,
with turnover of $5.3 trillion per day*. To put this into
perspective, the U.S. stock market trades around $226
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.
20XX 20XX 20XX 20XX
4. 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.
5. Top 6 Most Tradable Currency Pairs
EUR/USD
The EUR/USD currency pair tends to have a negative correlation with USD/CHF and a positive correlation with the GBP/USD (more on
these currency pairs later on). This is due to the positive correlation of the euro, the British pound and the Swiss franc. (To learn why the
EUR/USD currency pair, see Why isn't the EUR/USD currency pair quoted as USD/EUR?)
GBP/USD: Trading The "Cable"
The GBP/USD pair tends to have a negative correlation with the USD/CHF and a positive correlation to the EUR/USD. This is due to the
positive correlation between the pound, euro and the Swiss franc. (To learn more, read Forex: Making Sense Of The Euro/Swiss Franc
Relationship.)
USD/CAD
The USD/CAD currency pair tends to be negatively correlated with the AUD/USD, GBP/USD and EUR/USD pairs due to the U.S. dollar
being the quote currency in these other pairs. (To learn more on the Canadian dollar, check out Commodity Prices And Currency
Movements.)
6. Top 6 Most Tradable Currency Pairs
USD/CHF: Trading The "Swissie"
The USD/CHF currency pair tends to have a negative correlation with the EUR/USD and GBP/USD pairs. This is due to the strong positive
correlation between the Swiss franc, pound and euro. The franc has long been thought of as a safe haven for forex traders in times of
political unrest. (To learn more, read A Primer On The Forex Market.)
USD/JPY: The "Gopher"
The next most actively traded pair has traditionally been the USD/JPY pair. This pair has been sensitive to political sentiment between the
United States and the Far East. The pair tends to be positively correlated to the USD/CHF and USD/CAD currency pairs due to the U.S.
dollar being the base currency in all three pairs.
AUD/USD: Trading The "Aussie"
The AUD/USD currency pair tends to have a negative correlation with the USD/CAD, USD/CHF and USD/JPY pairs due to the U.S. dollar
being the quote currency. As well, the correlation with the USD/CAD is also due to the fact that both the Canadian and Australian dollars
share a positive correlation with each another as both currencies are commodity block currencies.
8. In the forex market, you buy or sell currencies.
Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar
to those found in other markets (like the stock market), so if you have any experience in trading,
you should be able to pick it up pretty quickly.
The object of forex trading is to exchange one currency for another in the expectation that the
price will change, so that the currency you bought will increase in value compared to the one you
sold.
