Identification of different currencies exchanged in Forex market

We explained about the Forex market in the last article. You might have gotten a good idea about Forex market and how to earn profits via Forex after reading that article. In this article, I concentrate on the types of currencies exchanged in Forex market and their uses. The fundamental basis of Forex is foreign currencies and we should keep a good eye on it (This does not include Rupees).

Powerful currencies used in foreign countries are commonly exchanged in Forex market. Therefore we don’t have Rupees in this market. We have to do our transactions using foreign currencies. You may develop some doubt in your mind as a beginner, but if you have a good knowledge it will be very easy for you t earn money through Forex. Now it’s time to do a good analysis on foreign currencies. (I wonder whether my wording is too hard to understand. If so, please be kind enough to inform me. I will try to write in normal language as much as possible in next articles. But try to remember some of them if you are really willing to become a Forex Trader.)

The countries that affect the Forex Market are,

United America

United Kingdom

Europe

Japan

Australia

New Zealand

Canada

Switzerland

The method of usage of these currencies in Forex Market is shown in following table.

The currencies exchanged in Forex Market

Country Name Currency Forex Name

United State of America US Dollar USD

Great Britain Pound GBP

European Euro EUR

Australia Dollar AUD

New Zealand Dollar NZD

------------------------------------------------------------------------------------------------------------------

(Now some people are already looks to be frightened. There is nothing to be afraid of. These are only symbols of currencies. You will eventually remember all of them over time.)

The above are only few of the currencies used. There are 44 such currencies, used in practice. These are the most important currencies that affect the Forex Market and definitely we will have to come across these currencies in our carrier. You will have to use these currencies, when you open accounts or when you make transactions.

I have shown you the way rupees are exchanged with USD in the example in previous article. In that we named it as LKR/USD. In a similar way we meet currency groups that are formed by joining two currencies when we deal with Forex market. We need two types of currencies in the least to do a money exchange. In Forex market, we call these type of groups formed after joining two currencies as Currency Pairs. From here onwards we use those symbols shown in the table and they are called Forex Name of the currency. Usually, the commonly used currencies used in Forex market are called Major currencies and less used are called minor currencies. Groups that involve USD are basically called major.

Major Currency Minor Currency

EURO/USD EURO/GBP

GBP/USD EURO/CHF

AUD/USD GBP/JPY

USD/CAD AUD/JPY

USD/JPY

USD/CHF

There is no need for you to remember all these currencies to do business with Forex market. Remembering major currencies will be enough. You should have the ability to identify a certain major currency group once you see it.

Currencies used for transactions

We meet around 44 currencies in Forex Market. But we do not use all of them to do our business. Main reason is not the inability, but details that change rates of major currencies are frequently updated and we are capable of understanding them more often in contrast to minor currencies. It is dangerous to trade without enough details. As a beginner, it’s better for you to do your transactions with these currencies first. In near future you are going to learn about the Forex News and use them which are only available for these major currencies. It is not that we don’t receive news for other currencies, but they are limited. Largest exchanges are done with currencies such as USD, Euro and GBP and we will provide you articles regarding them in the future.

(Some people lose what they have by trying to do business without enough knowledge. Some people do exactly as we say. Some people invest in every kind of currencies in Forex and lose their way. But you should not be like that. Because I teach you the correct way and you should follow it.)