Trading Currencies Currencies were one of the first markets to be enjoyed by traders. Committed to providing a most volatile pairs and transparent trading platform, we were one of the very first brokers to provide credit card funding.
The Forex exchange market is the largest, and the need to exchange currencies of different jurisdictions is the sole reason why the forex market is the largest. Foreign Exchange prices are influenced by a range of different factors, including inflation, interest rates, government policy, employment figures and demand for imports and exports. Because of the sheer volume of Forex market traders and the amount of cash exchanged, price movements can happen very quickly, making currency trading not only the largest financial market in the world, but also one of the most volatile. To understand Forex trading ,unlike other financial assets such as stocks, commodities or bonds, Forex trading always involves the combination of two currencies. Therefore, if the EURUSD exchange rate is quoted at 1. If the exchanged rate rises to 1.
The opposite is true if the EURUSD rate falls to 1. Traders of the EURUSD are actually trading the changes in the exchange rate between the Euro and Dollar. If the Euro weakens against the Dollar, your position will be with a loss. The answer to this question is supply and demand. When there is more demand for one currency than another, it will cause the exchange rate values to change. For example, when the tragic earthquake and tsunami hit Japan, the value of the Japanese Yen rose against other major currencies. This was due to the fact that Japanese companies that had investments out of Japan had to quickly bring their money back into Japan to pay for repairs and insurance liabilities.
These companies converted their foreign holding into Yen in the process. As a result, there was a sudden spike in demand for Japanese Yen. The main causes of changes in supply and demand are due to changes in economic trends, geopolitical events, and changes to market sentiment. All most important events can be seen and followed on the economic calendar. Economic Trends: When a country begins to show stronger than expected growth, it will often trigger increased investments in that country and raise currency demand. Geo-Political Events: Geo Political events can also affect currency exchange rates as investors may decide to quickly exit holdings in one country if they that their funds may become less safe.