The stock market is interesting and at the same time, a challenging investment sector. This makes it essential for investors to stay updated with different aspects of the stock market. The main aim of staying updated is to ensure that the respective investor can understand the ups and downs of the stock market, along with the reasons associated with the same. Currencies form a critical aspect of the stock market. The financial sector in which investors buy and sell currencies is known as the foreign exchange market. This investment market is an online platform. The foreign exchange market is extensive, and several currencies of countries across the world are chosen in this market from time to time.
Different types of currencies: As per the recent researches and industry charts, there are mainly eight types of currencies. Depending on the choice of the investor, location, and investment goals, a particular kind of currency is taken into consideration. Here are the most commonly discussed and utilized types of currencies in the investment market. These include the following:
- US dollars (USD)
- European Euro (EUR)
- Canadian Dollar (CAD)
- Australian dollar
- British Dollars
- Swiss Franc
- Japanese Yen (JPY)
- South African Rand (ZAR)
Out of the types mentioned above of currencies, US dollars (USD) is the most commonly advised and traded currency in the foreign exchange market or forex market.
Basics of Currency Trading:
Currency trading mainly involves the buying and selling of the respective currencies. This process is primarily carried out in the currency market. This investment market is also known as the Forex market. As per the recent researches in mid-2019, it is found that the average per day trading value of currencies is around $6.6 trillion. This makes it quite clear that the currency trading market or the forex market has got the highest liquidity features when compared to other forms of investment. One of the exciting aspects of currency trading is that the operations are performed in pairs of currencies. Here, one currency is traded against the other in the same pair. Also, at the time of trading, specific points are allotted and quoted with the percentage in points popularly known as ‘pips’.
It is said that currency trading in the foreign exchange market is performed round the clock in different time zones of the major countries. But the currency trading market is closed from Friday evening till the evening of Sunday. There are mainly three sessions, such as the United States, European, and Asian currency trading sessions.
The currency trading market works based on different factors that contribute to the changes occurring in the foreign exchange market. The primary factor which ensures the changes in the functioning of currency trading is the demand and supply of the respective currency. Various political acts in different countries across the world and changes in the interest rates also impact the currency trading performance and growths over time. Such factors also contribute to the risks associated with the forex market. Investors must study such risks well to understand how this unique investment sector works. Thus, currencies form a crucial part of the investment market, especially that of the foreign exchange market.