Foreign exchange trading has traditionally been left to experienced bankers but it can now also be utilised as another investment market that has the potential to diversify your portfolio and bring interest back into an otherwise unimpressive period for investment returns. The first thing you should do when getting into currency trading is to look at some of the world’s top currencies and study their movements, find out what it is that makes their value rise as well as what causes their decline. It should also be remembered that a nation’s currency only has marketable value when it is paired against another nation’s currency. Some currencies to watch for your next investment include:
- The Australian and New Zealand dollar. A good currency to look at first, if you are Australian, is, of course, the Australian and the New Zealand dollars. Both these currencies, the Australian dollar (AUD) and the New Zealand Dollar (NZD) offer the currency trader the highest yield of all the other top markets. They can be volatile under certain circumstances but both have good relationships with other commodities such as gold and silver.
- The US dollar (USD) is still the benchmark currency from which all other currencies are valued, particularly the British pound, the European euro and the Japanese yen. It is the dominant currency of the world because America remains the world’s largest economy.
- The European euro (EUR) is anchored in Germany where the European Central Bank is situated. It is the sovereign currency of 15 independent European countries, the main ones being Germany, France Italy and Spain.
- British pound (GBP). Once the strongest currency in the world, the British pound, or pound sterling, is still a major world currency. It can be the most volatile of all currencies because of swings occurring in important cross currencies with which it is closely tied, such as the pairing of the GBP/Japanese yen and the GBP/Swiss franc. It is most volatile during the US and London market sessions.
- Japanese yen (JPY). Japan is still seen in some circles as the world’s second greatest economy. Its attraction is its low interest rate, especially when matched against the currencies of Australia, New Zealand, or the UK. The best time to trade with the yen is during the crossover between the London and New York markets.
- Swiss franc (CHF). The Swiss currency has similar movements to the euro. It seldom fluctuates.
- Canadian dollar (CAD). A ‘steady as she goes’ currency mainly affected by the movements in the price of crude oil as that remains the country’s main export earner. Its main attraction is its usefulness as a hedge investment against oil price fluctuations.
- South African Rand (ZAR). A very volatile but still emerging currency. It can be likened to the CAD as where the CAD is tied to the price of crude oil, the ZAR is similarly linked to the fortunes of gold and platinum, both major export metals of South Africa.
Around three trillion dollars changes hands in Forex trading around the world each day, it therefore offers valuable opportunities for an astute currency trader to make successful investments.
Teresa writes about forex trading online for Forex Trading Finder where you can compare foreign exchange brokers to get the best forex reviews.
{ 0 comments }