To trade in the online forex market, you need to know which currencies are the most preferred ones by investors. There are 6 major currencies that provide the bulk of the online forex trading transactions on a daily basis.

Getting to know all of the currency is very important, especially for placing online forex trades. Below is a list of the sic major currencies.

The Major Currencies Currency and Code Symbol

United States Dollar USD $
Euro-zone Euro EUR €
Japanese Yen JPY ¥
British Pound Sterling GBP £
Swiss Franc CHF -
Australian Dollar AUD $

Any currency that is backed by an existing nation can be traded in the online foreign currency exchange market. In the chart above, the major currencies are depicted in a descending order. These are the major currencies, meaning the most used but not necessarily strongest currencies in the world.

The US Dollar has been the top currency for decades. It has maintained its strength and today it is used as the most common standard that other currencies are exchanged by. Most changes in the US currency are seen in the forex market first because of its benchmark standards.

The Euro has been around for only a few years, but has already established itself as the second most traded currency. This is in part due to the fact that it has exchanged many other coins in its spread through Europe and other places as well.

The currencies appear in a special three letter code called the ISO 4217 for example USD, EUR, etc. The ISO 4217 is the international standard that is used for the three letter codes, or the currency code that is used in order to define the names of forex currencies. This number is used by online forex quotes as a short abbreviation of the full name of the currency that is being displayed.

Below I have listed some reasons why forex trading is increasingly becoming an investment opportunity of choice for many investors and day trader over equities trading.

The first is the 24-hour availability. When trading forex it doesn’t matter whether its 3am or 8pm, there will always be a trader somewhere looking to sell or a buy. This gives you the ability to react to any financial news, as they occur. Forex traders can enter and exit their trades at any time-without having to wait until the market opens to act on new information. Equity trading is restricted to the operating hours of the various equity exchanges.

The second is its unparalleled liquidity which leads to greater efficiency. Forex boasts a daily trading volume that is 50 times larger than the New York Stock Exchange. This significant liquidity of this market helps ensure price stability, because there are always broker and dealers willing to buy or sell currencies. Equities are more vulnerable to liquidity risks due to limited trading volumes and market accessibility. In the less liquid equity markets, large price movements may occur when individual transactions take place.

Third is leverage offered by most online forex brokers is substantially larger than any offer you’ll find in the equities market. The margin online forex brokers offer is far greater than the common 2:1 margin available in equity trading. Most forex brokers offer up to 100:1 leverage, traders can post $100 margin for a $10,000 position, or 1%. While certainly not for everyone, the substantial leverage available from online currency trading firms is potential money making tool.

Fourth is the Lower Transaction Costs. Forex trading is much more cost efficient in terms of commissions and transaction fees. Easy Forex for example, charges no commissions or fees, while still offering forex traders full access to all relevant market information and trading tools. This is in stark contrast to the equity market, where commissions for stock trades range from $8 to $70 and higher in addition to the quoted spread.

Fifth In the forex market, there is a potential to profit (with a risk of loss) in both bull and bear markets. Currency trading always involves buying one currency and selling another, there is no structural bias to the market. If you are long a currency, you are always short another currency. Because of this, there is potential for profit when currencies trend upwards and when they trend downwards. This is different from the equities market, where most traders go long instead of short stocks, and so much of the equity investment community tends to suffer in a bear market.

The ability to sell foreign currencies without any limitations is another distinct advantage over equity trading. In the US equity trading markets, it is much more difficult to establish a short position due to the Zero Up-tick rule, which prevents investors from shorting a stock unless the immediately preceding trade was equal to or lower than the price of the short sale.
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With the widespread availability of the internet, FOREX trading is easier than ever. In recent years, FOREX trading has earned a reputation of being a great way of investing your money. If you want to become a FOREX trader, there are a few things to bear in mind.

First, you should understand the FOREX market by visiting websites and reading books. Once you are familiar with the way FOREX works, your next step is to choose a brokerage firm. There are plenty of brokers available online, each broker with its own set minimum. You can usually start with as little as two or three hundred dollars.

Online Trading Platform

When you sign with a broker, they provide you with an online trading platform where you will handle all your transactions. This platform comes in the form of FOREX software where you can log in and trade from your home computer. This makes buying and selling currencies as easy as a click of a mouse. You can also set it up to automate the process so you can buy and sell currencies even when you are not in front of your computer.

Once you sign up with a broker, thoroughly examine the software. If tutorials are available, take full advantage of them. Any slight mistake can be costly, so understanding where all the functions are and how each of them works is crucial to your success. Take your time and don’t be afraid to go to the broker with questions on how to use the FOREX software.

Minimize Your Risks

FOREX software performs many tasks. It keeps you up to date on various currency values, just like a stock ticker. It allows you to manage your funds and gives you the option of withdrawing or depositing money into your FOREX account. Most importantly, the software allows you to buy and sell currencies at will, any time of the day or night.

As mentioned earlier, you have the option of automating your FOREX transactions so it can do its job while you are away from the trading platform. On buying a currency, you can set up the FOREX software to sell when it the currency drops to a certain level and if it reaches a reasonable high point. In this way, you are minimizing risks of loss and keeping control over your profits.

Test Before You Buy

The best part about FOREX software is that you have the opportunity to practice and test the software before investing your money. You can use play money while you learn to use the software and its many functions. More importantly, you can learn more about the FOREX market before you put real money on the line. You should use the time to research and learn trading methods, and how to read trends and predict outcomes.

When you are ready, you can deposit money and begin trading with real money. Remember, you need some practice and you may experience some loss. To start off, use a small amount until you feel more confident with the software as well as your FOREX market skills.