Forex Market Size and Liquidity

Lesson No 12

It is very important for all traders to have knowledge about Forex Market Size and Liquidity, even in our normal business we take care of your market size and liquidity so that we can earn our share of profit from the existing market and traders.  Regional stock exchanges works for specific period of time in a day and are closed after that time, while forex trading is totally different from this.  It remains open for 24 hours a day and 5 days a week.  Let have look over which currency have higher trading volume and which currency have lower trading volume in forex trading:

This chart shows that USD is at number one, EUR at number two and JPY is at number three while CAD has lowest trade in forex market.

From this chart we can say that US Dollar is the king of forex market, as it has almost 85% of market share, so we should say that Dollar is the King of the Forex Market.

Forex Trading Always Works in Currency Pairs

Lesson No 10

There is an important question that how forex trading works?, so toady we will discuss this aspect of forex trading, that how it works.

During the process of forex trade one currency is bought while other is sold out, which means that you are buying one currency and selling other currency in the pair, e.g for the pair EUR/USD, AUD/USD, and USD/JPY in this example you are buying one currency and selling other currency.  In case of EUR/USD you are buying EUR and selling USD and vice versa.  Currency pairs are either bought or sold out, a stronger currency is always bought while weaker currency is sold out.  Strength or weakness of a currency depends upon its production, inflation, employment opportunities, political stability, its relations with other nations and law and order situation with in the country.

Division of Currency Pairs

Lesson No 11

Currency pairs are always divided into three major categories

Majors:          Those pairs in which atleast one currency is USD are called Major Currency Pairs like EUR/USD, AUD/USD, USD/JPY, GBP/USD, USD/CAD, USD/CHF, NZD/USD etc.

Cross:           All those pairs those dont any USD currency are called Cross Currency Pairs like NZD/JPY, CAD/JPY, AUD/NZD, EUR/JPY, EUR/GBP etc etc.

Exotic:           Currencies of developing countries are included in this group like, USD/HKD, USD/SEK, USD/DKK, USD/NOK, USD/ZAR, USD/SGD etc