What is Currency market?

Currency market is one of the biggest markets, where you can exchange one currency for another one. ‘Selling’ a currency means someone else is going to buy the very currency. So, here enters the stage the exchange rate between those two currencies, which is of high importance when trading currencies. The rate is changing rapidly, so those fluctuations allow traders to make a profit on the market.

The currency market is enormous, as the daily trading volume is 6.5 trillion dollars. It overpowers the likes of the New York Stock Exchange (NYSE) which, by comparison, has a trading volume of only $22.4 billion per day.

The currency market attracts various participants, like Central Banks of different countries, Investment Managers, Corporations, Hedge Funds, Brokers, and Retail Traders. The physical traders also take part in currency trading very actively.


Advantages of Currency Trading with AxiomTrade

• 66+ currency pairs, including majors, minor, and exotics
• 24/5 open for trading
• The most liquid market in the world
• Leverage up to 1:100
• Tight spreads


What is Currency trading?

Currency trading is the process of selling and buying currencies to make a profit. Currencies are always traded in pairs, the first currency is the base currency, and the second one is the quote currency.

For instance, the EUR/USD pair is the most traded currency pair in the world. The example involves buying the Euro and selling the US dollar. It means that the price represents the amount of US dollars that can be exchanged for one Euro (EUR/USD = 1.2500).

The Currency market is open 24 hours a day, five days a week, and traded online with price quotes changing on the regular basis. The reason for this is many factors, like market conditions, geopolitical risks affecting supply and demand for currencies, and interest rates.

Being one of the biggest markets in the financial field, currency market represents plenty of opportunities for everybody wishing to experience the highest volumes and liquidity.



What does influence the prices in currency trading?

Many factors are influencing the price changes in currency trading. However, there are mainly 5 key drivers, which are the following ones:

  • Differentials in inflation
  • Differentials in interest rates
  • Public debt
  • Terms of trade
  • Political and economic stability

What is important in currency trading?

The most significant factors affecting a retail currency trader the most are the trade execution quality, speed, and spreads. The one influence the other.

The spread is the difference between the bid and the asking price of a currency pair (buy or sell price), and so to make it even easier it is the price at which your broker or bank is willing to sell or buy your requested trade order. Spreads, however, only matter with the correct execution.

In the currency trading marketplace, when we refer to execution, we mean the speed at which a foreign exchange trader can buy or sell what they see on their screen or what they are quoted as bid/ask price over the phone. A good price doesn’t make sense if your bank or broker can’t fill your order fast enough to get that bid/ask price.

What are Majors in currency trading?

The most traded pairs of currencies in the world are called the Majors. They constitute the largest share of the foreign exchange market, about 85%, so they exhibit high market liquidity. The Majors are EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, NZD/USD, and USD/CAD.

What are Minors in currency trading?

Minor currency pairs or crosses are all currency pairs that do not include the USD on one side.

What are Exotics in currency trading?

Exotic pairs include the less traded currency pairs that include a major currency paired with the currency of a smaller or emerging economy. These pairs usually have less volatility, less liquidity, and do not present the dynamic behavior of major pairs and crosses.

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