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The main tool for Forex trading

The main tool for Forex trading

Foreign Exchange is the world's largest currency market. The daily turnover is trillions of dollars.

 

On Forex, bet deals are traded, without buying real currency. Earn on the change in value over time.

 

DEFINITION OF CURRENCY PAIR

 

Forex trading is a derivative of a currency pair. Its cost is calculated by the ratio of the two currencies.

 

For example, consider EUR / USD - this is a currency pair where the euro is valued against the dollar. Euro is the base currency (written first), and US dollar is the quote currency (written second).

 

When deciding, the liquidity of the instrument is taken into account, namely the ability to sell at a bargain price, which depends on demand. The more and more stable the demand, the higher the liquidity.

 

Requirements:

  • have minimum spread;
  • to be executed quickly;
  • have a low risk of slippage.

 

These properties are: dollar, euro, British pound sterling, Japanese yen, Swiss franc, Canadian and Australian dollars. Effective combinations are created from these market leaders.

 

CLASSIFICATION

 

Subdivided into major, minor and exotic.

 

Basic pairs

 

The group is among the leaders in popularity among traders. Each contains the US dollar as an underlying or quoted instrument. They have the smallest spreads and are considered the most liquid Forex instruments.

 

  • For example EUR / USD. The share of the Forex market is 23-35% of all foreign exchange transactions. It is this tool that is under the watchful eye of analysts around the world. A large number of reviews are published that predict the movement of the trend. But the couple is very sensitive to political news. Volatility within a trading session fluctuates up to 100 points, in exceptional cases it can reach 300 points. Specifications are set by bidding in the UK and USA.
  • GBP / USD. Financial asset with 13-17% market use. Differs in instability and significant volatility. Reacts to any news related to the English bank.
  • USD / CHF. This tool has good characteristics, making it easy to make predictions. Volatility does not exceed 60 points. Suitable for conservative traders.

 

Forex Cross Pairs

 

Pairs without USD are regarded as secondary or cross-currency. They are characterized by high volatility. A special feature is the different interest rates for buying and selling - carry trade. The best liquid minor currency pairs must include the euro or the British pound, or the Japanese yen.

 

Exotic

 

Pairs in which there is a low liquid currency are exotic. They are characterized by poor analytics, high risks and spreads.

05.03.2021
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