Forex, where currencies of all countries of the world can be converted into profit, has also managed to become a favourite of foreign investors. Managed by trading centres around the world, forex is seen as an investor-friendly market with the advantages it provides. The fact that it is mostly associated with currency trading shows that these tools are best valued here. Currently, various currencies are subject to be invested in the forex market, which has recently attracted attention with its advantageous aspects. We prepared an article about the variety of currencies traded in the Forex Market. Below you will find useful information about the variety of currencies traded in forex.
What are the Currencies Traded in the Forex Market?
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Today, the development of financial markets by finding support from advanced technology has brought great convenience for investors. Moreover, investing in a global market where transactions such as forex are carried out easily over the internet means taking advantage of the same opportunities as investors from all over the world.
The advantages brought by its globality feature ensure that investment instruments such as foreign currency can be utilized in the best way possible. In addition, these markets have a wide range of investment instruments and investors are free to choose what they want.
Forex is managed through trading centres located around the world. That is, they do not have a single centre. Due to the geographical location of these trade centres, while one of them closes, the other is always opened. In this case, time differences between countries do not adversely affect the investor.
In this way, the forex market never closes besides weekends. It is possible to trade in the forex market from electronic devices with an internet connection, whichever country’s trading centre is open, 24 hours a day, 5 days a week. At the same time, diversity was provided in investment instruments.
The diversity of investment instruments arising from the globality of the Forex market, especially in terms of trading with the currencies of all countries of the world, stands out.
As it is known, currencies; It is divided into 3 groups as major, minor and exotic. Major currencies are the currencies of the countries with the most vibrant economies. The most vibrant economies in the world are known as Japan, England, America, Canada, Australia and Switzerland.
The currencies of these countries are; They are US dollars (USD), euros (EUR), Japanese yen (JPY), Canadian dollars (CAD), Australian dollars (AUD), British pounds sterling (GBP) and Swiss francs (CHF). The trading volume of each is high, as their earning potential is greater.
Minor currencies traded in financial markets are the currencies of less vibrant economies compared to the countries of the major currencies. Currencies such as Hong Kong dollar (HKD), Singapore dollar (SGD), New Zealand dollar (NZD), South African Rand (ZAR). These currencies attract fewer people.
The currencies in this group belong to the economies of developing countries. Their risks are quite high and they are generally preferred by investors with a high-risk appetite.
While investors used to be able to trade with certain major currencies in exchange offices or stock exchanges, thanks to forex, they had the chance to invest in the currencies of all other world countries, which are considered minor and exotic currencies.
These markets are; makes it possible to invest in major, minor and exotic parities. Investors can start trading by choosing the most suitable currency pair for them.
What are the major currencies in the forex market?
In addition to the wide variety of currencies traded on these platforms, some currencies in the forex market have a higher transaction volume. These instruments, which are traded in pairs, which we call parity, are preferred more than others due to their volatility.
For example, the EUR/USD parity accounts for almost 80% of the foreign exchange transactions in the forex market. The fluctuations created by the two strong currencies during the day have managed to become the favourite of investors who want to make a profit in the short term. There are even those who make daily profits from these price movements.
Pairs such as EUR/USD, USD/JPY, GBP/USD, EUR/GBP and USD/CHF are the high trading volume parities of the forex market. These currencies, which make up the most lively parities, are the major currencies as you can see.
At this point, the most important detail you need to know is; no matter what parity it is, one of the currencies must be major.
Now, let’s examine the detailed information about the parities with the highest trading volume in this market;
EUR/USD Definition
It is one of the pairs with the highest trading volume invested in these markets. In this parity, which is formed by the combination of the Euro and the American dollar, the first (Euro) currency is the base currency and the second (USD) is the counter currency.
As it can be understood from here, developments in countries with Euro as their currency may affect the value of this parity. Traders with sufficient knowledge of the markets are recommended to trade this pair.
USD/JPY Definition
In this pair, the US dollar is the base and the Japanese yen is the counter currency. The side that has more say on the price course of the pair is the Japanese yen. For this reason, investors should meticulously follow what is happening in the Japanese economy.
Investors should act very carefully in this parity, which has a lot of fluctuation. In addition to effective market monitoring, and analysis should also be used. Investors should be aware of the high risk involved in the pair.
GBP/USD Definition
It is the parity consisting of the British pound and the American dollar. Investors should follow the UK economy closely. Again, the first forms the base currency and the second creates the counter currency.
Investors need to be able to make a strong forecast in order to predict what the future price direction will be. For this, analyzes and agenda events should be taken into account. This parity has started to gain value, especially since the 2000s.
EUR/GBP Definition
It is the parity formed by the Euro and the British pound. Transaction volume is quite high. As the British pound is the more dominant trendsetter, investors need to be able to accurately interpret what’s going on in the UK economy.
Its fluctuation is less compared to others. Therefore, it can be said that they contain less risk. In addition, since the Euro is a currency used by European countries, any developments there should be taken into account.
USD/CHF Definition
It is a currency pair consisting of Swiss francs and American dollars. The Swiss economy is extremely important. However, the US dollar has a greater impact on the course of the pair.
This parity, which has recorded a downward trend for a period of 10 years, is among those with high trading volume despite losing its investors. It is also known that it recorded rapid falling and rising trends. It is one of the most preferred pairs of Forex traders.
Major Currencies to Trade in Forex
In the forex market, where there is a variety of foreign exchange, it is also a matter of curiosity which ones should be traded. However, there is no general answer to this question. It varies according to the investor’s intention to invest and the expectations from the transaction.
While the currencies with a high trading volume offer a higher profit in a short time, the risks increase due to excessive mobility. Major parities can be given as an example. They are generally preferred by investors who like to take risks.
In addition, the pairs with low trading volume are safer, but they offer a lower profit than the major ones. Considering all these situations, the investor himself makes the right decision on which one to trade.
While making your transactions in the Forex market, you should create positions in line with your investment purpose. For this, you should be a good market follower and pay attention to the analysis. If you know exactly what your expectations are
You should have knowledge about analysis methods and gain experience. While watching a pair, you should be aware of the direction they will take in the future by applying both fundamental and technical analysis methods. Technical and fundamental analysis are very important in order to accurately predict the direction that prices will follow.
Why are Foreign Exchange Transactions More Profitable in Forex?
Investors constantly question where to invest in the winning instruments in the best way. Although most people wonder whether foreign exchange transactions are made with Forex, the most correct answer to this is that the market is the most suitable place for these transactions.
Trading on these platforms has many pluses. First of all, they have a different place from other financial markets in terms of transaction characteristics.
One of the important features that make these markets different from others is the reverse correlation situation. As it is known, they are bought and sold in pairs with currencies in forex, in a way called parity.
Depending on the situation of the markets, it is possible to make both purchase and sale transactions with investment instruments by taking advantage of the two-way transaction feature here. For example; Earnings can be achieved by buying euros when the EUR/USD parity is gaining value, and by buying dollars when losing value.
The forex market is more profitable due to many features such as the double-sided trading feature, leveraged trading system, the ability to stop risks with orders, and the world’s largest trading volume.
An investor who uses the transaction features correctly makes higher profits from foreign exchange transactions here compared to other markets. With the right positions at the right time, the forex market is a very suitable place for you to make a better profit even with a small amount of money.
When evaluated in terms of parity diversity, in addition to all these, it can be concluded that the market is investor-friendly. Here, thanks to this, it is increasing its reputation day by day as a platform that earns more than other financial markets.
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