Types of Currency Pairs And How to Trade Them

The online forex trading market is a highly liquid market. On the virtue of trading over $5.3 trillion dollars on a daily basis, the forex market is one of the most lucrative to participate in as the liquidity allows traders to register profits almost instantaneously and pocket them without the hassle of low liquidity. Adding to this is the fact that the forex market operates 24 X 5. This makes it accessible at any point of the day over the entire week. Hence, traders regardless of their locality and country can benefit from this market equally. This means that a trader engaged in forex trading in Pakistan is likely to have the same access and opportunities like a trader in the Western economies. This is most important advantage it offers over the stock market. Also, traders get several options while they are trading in the currencies. Unlike the stock market, where traders can invest in the stocks listed only on that stock exchange, the foreign exchange market allows traders to trade in any currency listed on the global market. This makes it a highly flexible and dynamic market. Forex traders in Pakistan have the freedom to choose the currency pairs they wish to trade in. Types of currency pairs that are usually traded in: Majors: These are currency pairs that usually involve the US Dollar as it is the most traded currency. They also involve gold and silver as they are regularly traded against the dollar.

Commodity currencies: These refer to the federal currencies of countries that depend heavily on the export of raw materials for income. Example: AUD, CAD and NZD Crosses: These refer to pairs that are usually not traded with the USD. Example: AUD/CAD, AUD/CHF, AUD/JPY. Exotics: Exotics refer to the currencies of emerging or developing economies such as that in Pakistan. These are usually traded in for their high growth potential and volatility. For novice traders who are looking to engage in forex trading, the sound knowledge of the different types of currency pairs and their characteristics is important while devising trading strategies. It is vital to consult reputed brokerage firms and get their opinion as these pairs have a yearly cycle and are also influenced by market news

Leave a Reply

Your email address will not be published. Required fields are marked *

ten × one =