What Is Traded In Forex?

 

 

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In the forex market, what is traded is MONEY, specifically various currencies.

Understanding forex trading can be challenging, so let's use a simple (though not entirely accurate) analogy to clarify.

Think of buying a currency as akin to purchasing shares in a particular country, similar to buying shares in a company.

The value of a currency is typically a direct reflection of the market's perception of the current and future health of the respective country's economy.

When you engage in forex trading and buy, for instance, the Japanese yen, you are essentially acquiring a "share" in the Japanese economy.

Your belief is that the Japanese economy is performing well, and it is likely to improve over time.

When you later sell these "shares" back to the market, the hope is to realize a profit.

In essence, the exchange rate of a currency in relation to other currencies reflects the condition of that country's economy compared to other economies.

As you progress through every belt in the Dojo Of Sensei, you will gain the knowledge and enthusiasm to begin trading with currencies confidently.

 

 

Major Currencies

 

 

While numerous currencies are available for trading in the forex market, as a new trader, you will likely begin with the "major currencies."

They earn the title of "major currencies" due to their extensive trading activity and representation of some of the world's largest economies.

Forex traders may have different opinions on what qualifies as "major currencies."

Some, who may have been more conventional and rule-abiding during their childhood (probably the ones who got straight A's), only consider USD, EUR, JPY, GBP, and CHF as major currencies.

They then categorize AUD, NZD, and CAD as "commodity currencies."

However, for those of us who embrace a more rebellious approach and prefer simplicity, we classify all eight currencies as the "majors."

Below, we provide a list of these currencies along with their symbols, countries of use, currency names, and some cool nicknames.

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Currency symbols always have three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency, usually the first letter of the currency’s name.

These three letters are known as ISO 4217 Currency Codes.

By 1973, the International Organization for Standardization (ISO) established the three-letter codes for currencies that we use today.

 

Take NZD for instance…

NZ stands for New Zealand, while D stands for dollar.

Easy enough, right?

The currencies included in the chart above are called the “majors” because they are the most widely traded ones.

DID YOU KNOW? The British pound is the world’s oldest currency that’s still in use, dating back to the 8th century. The newest currency in the world is the South Sudanese pound, made official on July 18, 2011.

 

I'd also like to let you know that “buck” isn’t the only nickname for USD.

 

There’s also: greenbacks, bones, benjis, benjamins, cheddar, paper, loot, scrilla, cheese, bread, moolah, dead presidents, and cash money.

So, if you wanted to say, “I have to go to work now.”

Instead, you could say, “Yo, I gotta bounce! Gotta make them benjis son!”

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