Foreign exchange is the biggest financial market in the world. Around $3 trillion worth of currencies change hands worldwide every day. That dwarfs the value of shares, government bonds and commodities that are traded daily. Particularly for major rates - like the dollar/euro - this usually means very liquid markets and very narrow differences between buying and selling prices.
Although forex is the biggest financial market of all, currencies are not bought and sold through central exchanges, like shares are. Instead, they are dealt through private electronic networks, made up mainly by big banks, brokers, companies and governments. And whereas stock markets are only open for a few hours each day, currencies trade around the clock.
With Tradefair Spreads' spread betting service, you have access to seventeen different currencies, or 37 currency pairs in total. These are split into"major" pairs like the Euro/US dollar, "minor" pairs like Sterling/Swiss Franc, and "exotic" pairs like US dollar/Mexican Peso. Major pairs are generally tradable continuously from midnight Sunday night to 20.59 on Friday. Minor and exotic pairs can mostly be traded between 07.00 and 21.00 each day.
Economic forces have a lot of influence over what happens in foreign exchange markets. Faster growth and rising interest rates in one country can mean that its currency rises compared to another nation's currency. So, it's important to watch out for the announcement of sensitive economic figures, such as unemployment, trade data, inflation, and interest-rate decisions - see the calendar of economic releases at www.ft.com
Even if you don't plan to trade currencies, you should be aware of the effects that foreign-exchange movements can have on other markets. For example, falls in the dollar may be good for commodity prices, as the chart below shows:
Dollar / Commodities chart
To find out how professionals approach forex trading, Beat the Forex Dealer by Agustin Silvani comes recommended.
The information in this article is for educational purposes only, it does not constitute advice and should not be construed as solicitations of any order to buy or sell. Past results are not necessarily indicative of future results.