Currency Market: A Growing Source of Finance

The is most commonly referred to nowadays as the foreign exchange market or the shortened form of Forex. Regardless of the name used to address this industry, it is essentially the same market in which there is a market for trading currencies. The growth of the currency market was initiated primarily in the 1970’s with the onslaught of floating exchange rates in countries around the world. Ever since the inception of the currency market, there has been an almost continuous growth and expansion including new countries and new currencies.

The parties involved in the currency market range from an individual sitting in front of their personal computer to major financial institutions or currency marketthe hundreds of brokers who are trained in the currency market field of trading. There are also big player currencies to be considered. The most widely traded and relied on currencies include the US Dollar, the Euro, the Japanese Yet, the Pound Sterling, the Australian Dollar, and the Swiss Franc. These currencies are the highlight of the currency market because exchange rates and market fluctuations tend to be most stable in these highly valued currencies.

There are many components which contribute to the rate of currency trading that involves political, economic and psychological factors. Politically, the more stable a country is then the less volatile their currency value will be and thus economically stable. The economic stability of a country and its currency is crucial towards determining which currency pairs are in your best interest when entering the currency market.

Psychological aspects of the currency market include such phenomenon such as market psychology in which traders are predicted to proceed in a certain way subject to circumstances. Also, traders rely on market trends which can be perceived by tools known as market or chart indicators. These indicators are best used in order to determine what type of trend is flowing and whether there will be a fall or rise.

The types of transactions used in the currency market include Forex spot transactions, Forex forward transactions, and Forex swap transactions to name a few. There are advantages and disadvantages related to each and every one of the types of transactions depending on the amount of currency available, the risks posed for the business or individual, or the ability to wait a long period of time.

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