E Forex Markets Explained

The foreign exchange market or forex or fx as it is also known, is the largest market in the world. As currencies are traded against each other in established currency parings, there is movement in price, either upwards or downwards of one currency against the other. Spread betting the forex allows you to bet on whether you believe the price of one currency will rise or fall against another, in order to profit.

Market liquidity and volatility

Prices move very quickly in the forex market as billions of pounds are traded. This liquidity gives rise to great volatility in prices at certain times, for example when an interest rate is announced by a central bank, which can have a direct impact on the price of one currency against another. Due to the large volumes of daily transactions, the forex can move very quickly in both directions, therefore it is advisable for you to minimize your risk by placing stop losses via your forex account when you trade.

Forex trading currency pairs

Here is a list of the main or major currency pairings:

EUR/USD – Euro/US Dollar
GBP/USD – British Pound/US Dollar
USD/JPY – US Dollar/Japanese Yen
USD/CHF – US Dollar/Swiss Franc
USD/CAD – US Dollar/Canadian Dollar
AUD/USD – Australian Dollar/US Dollar
NZD/USD – New Zealand Dollar/US Dollar

Forex market currency minor pairs:

These are pairs which are not paired off against the US dollar.

EUR/CHF – Euro/Swiss Franc
EUR/JPY – Euro/Japanese Yen
EUR/GBP – Euro/British Pound
EUR/AUD – Euro/Australian Dollar
EUR/NZD – Euro/New Zealand Dollar
GBP/CHF – British Pound/Swiss Franc
GBP/JPY – British Pound/Japanese Yen
GBP/AUD – British Pound/Australian Dollar
CAD/JPY – Canadian Dollar/Japanese Yen
AUD/JPY – Australian Dollar/ Japanese Yen
AUD/CAD – Australian Dollar/Canadian Dollar
AUD/NZD – Australian Dollar/New Zealand Dollar
AUD/CHF – Australian Dollar/Swiss Franc
NZD/JPY – New Zealand Dollar/Japanese Yen
CHF/JPY – Swiss Franc/Japanese Yen

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Currency Trader 7 months ago Member's comment

Good article.