Currencies (Forex)
Trade Foreign Currencies online (Forex pairs) with leverage. The most popular currency pairs to trade like EUR/USD, GBP/USD, USD/CAD, USD/JPY, USD/CHF and more, can be traded at Crystal Ball Markets. Use the advanced analytical tools on our MT7 platform to improve the profitability of your trading and reduce potential losses.
FAQs
What is the Foreign Currency Exchange (Forex) Market?
Foreign Currency Exchange Market, more popularly known as the Forex market involves the trading and exchange of one currency against another currency. It is the world’s biggest and most liquid financial market, with daily average trading volumes of over $6 trillion. It is typically a round the clock market, starting from the Australian Market window of 8.00 AM (Sydney time) on Monday Mornings through till about 16:00 (New York time) on Friday in the U.S. Crystal Ball Markets offers 24/5 margin trading on over 50 different Forex pairs.
Typically, there are three types of primary markets for foreign currency exchange:
The spot market, which involves the exchange of one currency for another one, which happens immediately, or on the ‘spot’.
The forward market, which is essentially an OTC agreement (Over the counter) between two consenting parties to exchange a specified volume of currency at an agreed ‘price’ on a date in the future.
The futures market, which is an exchange traded contract for a specified currency volume to be traded at a pre-agreed rate for a contract month in the future.What are Foreign Currency Exchange Pairs?
Forex pairs are typically of three main classes:
Major Pairs are the currencies of some of the world’s most developed economies traded against the US Dollar (USD). For instance, EUR/USD, GBP/USD, USD/JPY, USDCHF, USDCAD, AUDUSD, NZDUSD
Minor Pairs and Cross Pairs, on the other hand refer to the currencies of the world’s most developed economies (excluding the US dollar) trading against each other. For instance: GBP/JPY, GBP/CHF, GBPCAD, CHFJPY, EUR/GBP, EURAUD, NZDJPY
Exotic Pairs refer to the currencies of other economies paired against a major currency or another exotic currency. For instance, USD/TRY, USD/SGD, EURNOK, USDRUB.
It is very important to be able read and understand the above currency pairs. Usually, the first quoted currency is the base currency, while the second currency is the quote currency. For example, if you bought the GBP/JPY pair, it implies that you are buying the Pounds Sterling and Selling the Japanese Yen, you stand to make a profit if the Pound strengthened against the Yen. However, you also stand to make a loss if the Pound depreciates against the Yen. The price quote is usually represented in the quote currency. For instance, if GBP/JPY is 157.74, it implies that £1 can be exchanged for 157.74 Yen.What Drives the Foreign Currency Exchange Market?
There are various factors that can affect the Foreign Currency Exchange market. The following are a few of those factors:
Economic News: News headlines on key economic indicators can move the markets. These economic indicators often reflect the state of a country’s economy which is eventually reflected in the strength or weakness of its currency. These economic indicators include: Gross Domestic Product (GDP), balance of trade, rates of inflation, interest or unemployment to name a few.
Political News: News headlines on major political events like, elections or referendums, may provide clues to the market, as to the trajectory of future growth of a country, and its currency. A good example is Brexit related news and its impact on the Pound Sterling.
You may need to consider the potential impact and timing of these new releases on your existing and new trading positions. An Economic Calendar, which can be found on our ‘Client Resources’ page can serve as a guide.
Basic Foreign Currency Exchange Market Concepts
Please find below the definition of a few basic concepts peculiar to the Forex Market and the financial markets in general:
Exchange Rate - This is the price of one currency, known as the base currency against another currency, known as the quoted currency
Bid/Ask - The rate at which a broker is willing to buy/sell a forex pair or financial instrument. The difference between these two rates is known as the Spread
Tick/Pip - This is the smallest unit of increase or decrease in the quote of a Forex pair or a financial instrument, in general
Margin – This is the amount of trading capital required to open a trading position (buy or sell) of a given volume, on a forex pair or other financial instrument
Leverage – An allowance from the broker that allows you to trade a higher volume of a forex pair or financial instrument, for a given amount of trading capital or margin. For instance, a leverage of 1:100 implies that for a trading capital or margin of $1,000, you can trade a volume of $100,000
For reference purposes, it may be useful to know the following nicknames ascribed to a few popular forex pairs:
Cable – GBP/USD
Swissy – USD/CHF
Ninja – USD/JPY
Loonie – USD/CAD
Aussie – AUD/USD
Fibre – EUR/USDMost Popular Foreign Currency Trading Pairs
The Forex major pairs can be considered to be the most popular Forex pairs traded. These are currencies of major world economies quoted against the US Dollar.
EUR/USD – This is the most popularly traded Forex pair in terms of trading volumes and liquidity.
USD/JPY – This is the next most popular Forex pair, in terms of trading volume. This is because the Japanese Yen is widely considered the flight-to-safety currency for most investors.
GBP/USD – This is another popular Forex pair. Its volatility is considered to be quite high especially because of BREXIT related events (The exit of Great Britain from the European Union).
USD/CHF – This is another major currency pair. Its trading volumes however, are not as high as the volumes traded for EUR/USD, USD/JPY and GBP/USD.
Next to these are the Cross Currency Pairs which are the currencies of other big world economies (excluding the U.S) traded against each other. Examples include: GBP/JPY, AUD/JPY, EUR/CHF, CHF/JPY.
Exotic Pairs are the currencies of major world economies paired against the currencies of other smaller economies. For instance: USD/TRY (USD to Turkish Lira), USD/ZAR (US Dollar to South African Rand), EUR/RUB (Euro to Russian Rubble).Most Suitable Foreign Currency Pair for Trading
In selecting the best Forex pairs to trade, its may be advisable to try out your trading strategies on a major forex pair, or cross pair on our free practice demo account. It is best to start out with small trading volumes before increasing your lot sizes according to your risk appetite.
Crystal Ball Markets offers margin CFD trading on major currency pairs, cross currency pairs and exotic currency pairs. CFD (Contract for Differences) trading gives you exposure and allows you to take position on the price movement of the underlying currency or instrument without actually owning it.We offer you our cutting-edge trading platform available on all computer and mobile devices (Mobius Trader 7 - MT7) which includes access to a wide variety of charting tools and an unlimited practice account to help you hone your trading skills. We also support you with a wide range of educational materials, market insights and trade ideas.
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