Forex quotations are usually denoted in pairs. Since, the U.S. dollar is observed as the common currency of the Forex market; in any Forex quote it is always treated as the base currency where it is one of the pairs. Incidentally, the U.S. Dollar is involved in nearly 90% of all Forex transactions.
There are many official currencies that are used all over the world, but there only a handful of currencies that are traded actively in the forex market. In forex trading platforms, only the most economically and politically secure and liquid currencies are required in sufficient quantities. For instance, the American dollar is the world’s most actively traded currency, because of the magnitude and power of the United States economy.
Commonly, the most traded currencies (not in particular order) are the U.S. dollar (USD), the euro (EUR), the British pound (GBP), the Swiss franc (CHF), the Japanese yen (JPY), the New Zealand dollar (NZD), the Australian dollar (AUD) and the Canadian dollar (CAD).
In general, there are 27 different currency pairs that can be derived from those eight currencies alone. Still, there are about 18 currency pairs that are traditionally quoted by forex market makers as an outcome of their overall liquidity. These pairs are:
USD/CAD, EUR/JPY, EUR/USD, EUR/CHF, USD/CHF, EUR/GBP, GBP/USD, AUD/CAD, NZD/USD, GBP/CHF, AUD/USD, BP/JPY, USD/JPY, CHF/JPY, EUR/CAD, AUD/JPY, EUR/AUD, and AUD/NZD.
The total amount of forex trading relating these 18 pairs characterizes the majority of the trading volume in the Forex market. This convenient number of options creates trading a much less convoluted when compared to trading with equities, which has innumerable possible options to pick from.
0 comments:
Post a Comment