Currency Pairs

What is Currency Pair?

Foreign currency market is the largest financial market in the world. It means exchanging one currency for another.

The market is open 24/7, and market data opens with Sydney and Tokyo first, then goes with Hong Kong, Singapore, Europe, and the US. Transaction volume is staggeringly huge, almost 50 times higher than trading volume worldwide. Nearly GBP 3 trillion in currency is traded every day! The difference between buying and selling prices are called the spread.

Why trade Currency Pairs?

The foreign currency market is more active than the stock market. More importantly, it is traded as 'Over the Counter', which means that currencies are not listed on any exchange. Although a large part of trade goes through London, New York, and Tokyo, there is no single central location where currencies are traded. It is truly a global market. There is no central control mechanism.

Currency pairs are popular with individual traders because of its accessibility and simplicity compared to other markets. You can start trading currency pairs on an online account from anywhere in the world.

Currency pair traders buy or sell currencies hoping that they will go up or down against the value of other currencies to benefit from the price difference.

Currency pair traders have frequent opportunities to take advantage of price fluctuations due to the high volume of trading activities and the many buyers and sellers in the market.

Leverage is the main attraction for traders in the foreign currency market. The feature allows you to make more volume transactions by using the borrowed money system.

Here is an example to explain the leverage procedure: Think that you have a 1.000 USD deposit and want to invest worth 100.000 USD. In this scenario, your leverage ratio is 1:100, which means you control 100 times higher than your main deposit. A 1% rise means 1.000 USD gain while a 1% drop means there is nothing left.

Currency prices are influenced by macroeconomic data, such as decisions made by central banks that make speculating on market prices relatively easy compared to equity markets. It is the trader sentiment that shapes the price.

In currency pairs, you only need to evaluate whether one country's currency will be worth more or less than another country's currency. Since everyone else does the same as you do, the price is the consequence of every trader's combined speculation.

Trading Hours
New York 13:00 - 22:00 GMT
London 08:00 - 17:00 GMT
Tokyo 00:00 - 09:00 GMT
Sydney 22:00 - 07:00 GMT

During certain hours, two sessions overlap. It creates even more volume in the market. Those are:

London & New York [12:00 - 16:00] GMT
Tokyo & London [07:00 - 09:00] GMT
Sydney & Tokyo [00:00 - 06:00] GMT

While the foreign currency market sounds pretty attractive to investors, It also has some difficulties to deal with. Dex Investing is here to help, ease and secure your investment journey in the foreign currency market.