Currency trading is the buying and selling of different currencies from different countries around the world. Traders can trade currencies in volume in the forex market.
The currencies are symbolized by three letters, for example British pound (GBP), US dollar (USD), Japanese Yen (JPY), Euro (EUR) and Australian dollar (AUD). However the currencies are traded in pairs in the market such as GBP/USD. The first currency in the pair (GBP) is called the base currency, while the (USD) currency in the currency pair is called the secondary currency.
The value of a currency can change at any time, precisely due to the political or economical status of a country. Traders that research about these facts are likely to have a successful experience as a forex trader.
Traders tend to go for the EUR/USD pair, as it’s the most liquid pair compared to the others in the market. Other common pairs in the market are USD/JPY, EUR/JPY, AUD/USD and GBP/ USD.
Currency trading could either get you a lot of profits or loss as a trader, which is why outlining a structured plan to guide you in the forex market is the key a successful trading experience. Details you could include into your trading plan could be stop losses, targets, entries and risk to reward ratio among various steps you could add.
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