Trading forex for beginners is not that easy for they need to figure out many things before really entering into the forex market; they need to learn the basics about currency trading, trading skills and strategies etc. in order to trade well. Here are some most commonly asked questions and the related answers about trading forex for beginners to learn from.
What are the most traded currency pairs in the forex market?
Trading forex for beginners is not easy; traders cannot make profit in any currency pair for some currency pairs can provide greater profit potential for traders than others. Thus, traders need to know the currency pairs that can bring the most profit potential for them. We know that there are a great number of official currencies that are used all over the world. But there are only some of the most economically and politically stable and liquid currency pairs are traded actively in the forex market. For example, the United States is a typical big power around the world; thus, the USD is the one of the world’s most actively traded currencies. Forex beginners first need to know what the most traded currency pairs are in order to know more about currency trading. In general, the eight most traded currencies are the U.S. dollar (USD), the Canadian dollar (CAD), the euro (EUR), the British pound (GBP), the Swiss franc (CHF), the New Zealand dollar (NZD), the Australian dollar (AUD) and the Japanese yen (JPY). We know that currencies must be traded in pairs; thus, the following are conventionally quoted currency pairs by forex market makers as a result of their overall liquidity: EUR/USD, EUR/JPY, USD/CAD, EUR/CHF, USD/CHF, EUR/GBP, GBP/USD, AUD/CAD, NZD/USD, GBP/CHF, AUD/USD, GBP/JPY, USD/JPY, CHF/JPY, EUR/CAD, AUD/JPY, EUR/AUD, AUD/NZD.
Is currency trading risky?
The reason why a great number of novice traders want to engage in currency trading is that they are attracted by the profit potential. But they need to know that trading forex for beginners does not necessarily mean profits for their capital can be exposed to risks anytime. Any financial investment involves risks; currency trading is not an exception. The ups and downs of the forex market may bring losses to traders if they fail to make use of it properly; however, the volatility can also bring great profit potential to traders.
What lead to the price changes in currency trading?
The forex market is volatile; the value of currencies can be up and down constantly. Trading forex for beginner is not that easy for they need to know what can cause the volatility of the forex market and how to predict the influence properly. Currency values can change for many complicated reasons. Sometimes they react to political and economic news or releases, sometimes they are driven by speculators and market psychology and sometimes they are driven by international business flows etc. In order to trade forex successfully, beginners need to know how to do fundamental and technical forex analysis to have a better understanding of what influence the currency value in currency trading.