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Forex Stock Exchange Forum  » Forex and Stock Trading English Forum » Forex School » How do I trade currencies?

How do I trade currencies?

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1attention How do I trade currencies? Mon Aug 31, 2015 10:50 pm



Trading currencies is the buying of one currency and selling another. ROYAL only offer Margin FX products which do not result in the physical delivery of the currency but are cash adjusted or closed by you by taking an offsetting position. When a certain currency is considered ‘cheap’ you can buy that currency in relation to another in the anticipation that it will increase in value after which you can sell it again.

This also works inversely if the currency is considered ‘expensive’.   Currencies are traded in pairs. The first currency in the pair is called the Base currency and is the currency you are either buying or selling. The second currency of the pair is the counter currency that you are trading against. For example, buying the EURUSD means you are buying the EUR and selling the USD.  

For example, if the EURUSD is currently trading at 1.3200, this means each Euro is equal to USD 1.32. If you anticipate the value of the EUR in relation to the USD to increase, you can execute a Buy order at this price, meaning you are buying EUR and selling USD.  

Let’s assume the price of the EURUSD increases to 1.3300; this means that now each Euro is equal to USD 1.33 and you have made a profit.   The most traded currency pairs are USD, EUR, GBP, CAD, CHF, JPY, AUD and NZD.

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