Stock Market Guide to Currency Trading
Foreign Currencies are traded regularly, usually by large investment banks or institutional investors on the Foreign Exchange Market. This foreign exchange trading is commonly known as Forex or “FX Trading”. In most cases, the values of the world’s currencies are not locked against one another. In fact, their relative values change by the second, and this provides opportunities for long or short term speculation, hedging and trading.
The main currencies traded in the foreign exchange markets are the US Dollar, the Euro, the Japanese Yen and the British Pound Sterling. However, other foreign currencies are also actively traded. Among these are the Canadian Dollar, the South Korean Won, the Swiss Franc and the currencies of South America. Until recently, the many different currencies of Europe were actively traded on the world’s foreign exchange markets but the majority of these currencies have been subsumed into the Euro, introduced in January of 2002. Curiously, Euro banknotes are common throughout the European Union but member countries are allowed to mint their own Euro coins. The coins share a common reverse but display a “national” obverse design that varies from one country to another.
Although foreign exchange trading has traditionally been the province of large investors for whom the incremental changes in value between currencies makes large trades potentially profitable, the advent of secure and speedy online trading programs have allowed individual investors to try their hands at Forex trading.
Many companies both in the United States and abroad provide the electronic means for traders to engage in spot foreign exchange trading from the comfort of their homes or workplaces. The company provides access to historical information, news and market analyses while empowering traders with the tools needed to conduct currency trades. Traders can observe the changes in their positions in real time via a complex graphic interface on their computer screens. With the continued interlinking of the world’s economies and the growth of free trade, there is pressure for the creation of common trading markets that may possibly lead to more “Euros” in the future.
In the interim, and for the foreseeable future, however, foreign currency traders will continue to have a wide choice of currencies to trade for fun and – hopefully – profit!