Month: July 2022

Other Forex Jargon

Every discipline has its jargon, and the currency market is no different. Here are some terms that a seasoned currency trader should know: Cable, sterling, pound: nicknames for the GBP Greenback, buck: nicknames for the U.S. dollar Swissie: nickname for the Swiss franc Aussie: nickname for the Australian dollar Kiwi: nickname for the New...
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What Is a Currency Carry Trade?

Carry is the most popular trade in the currency market, practiced by both the largest hedge funds and the smallest retail speculators. The carry trade is based on the fact that every currency in the world has an associated interest. These short-term interest rates are set by the central banks of...
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What Currencies Trade in Forex?

Although some retail dealers trade exotic currencies such as the Thai baht or the Czech koruna, the majority of dealers trade the seven most liquid currency pairs in the world, which are the four “majors”: EUR/USD (euro/dollar) USD/JPY (dollar/Japanese yen) GBP/USD (British pound/dollar) USD/CHF (dollar/Swiss franc). The three commodity...
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What Are You Really Trading?

FX traders hope to profit from changes in exchange rates between currency pairs. For dollar-denominated accounts, all profits or losses are calculated in dollars and recorded as such on the trader’s account. The FX market exists to help with the exchange of one currency into another, a facility used...
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What Is a Pip?

Pip stands for percentage in point and is the smallest increment of trade in FX. In the FX market, prices are quoted to the fourth decimal point. For example, if a bar of soap in the drugstore was priced at $1.20, in the FX market the same bar of soap...
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What Is the Forex Commission?

Investors who trade stocks, futures, or options typically use a broker who acts as an agent in the transaction. The broker takes the order to an exchange and attempts to execute it per the customer’s instructions. The broker is paid a commission when the customer buys and sells the...
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How Does Forex Compare to Other Markets?

Unlike stocks, futures, or options, currency trading does not take place on a regulated exchange, and it is not controlled by any central governing body. There are no clearing houses to guarantee trades, and there is no arbitration panel to adjudicate disputes. All members trade with each other based...
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The Bottom Line

Every currency has specific features that affect its underlying value and price movements relative to other currencies in the forex market. Understanding the factors that move a currency is a pivotal step in becoming a savvy participant in the forex market. The U.S. dollar, the euro, the yen, the...
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The Canadian Dollar

The Canadian dollar, nicknamed the loonie, is also a commodity currency, meaning that it often moves in step with the commodities markets—notably crude oil, precious metals, and minerals. With Canada being such a large exporter of such commodities, the loonie often reacts to movements in underlying commodities prices, especially that...
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The Australian Dollar

Also known as the Aussie, the Australian dollar is one of the major currencies of the Asia-Pacific region. The Aussie is considered one of the foremost commodity currencies, meaning that its value can be affected by price shifts in Australia’s major exports. The AUD-USD trading pair now accounts for 6.37%...
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