3 Types of Forex Market Currencies You Need to Know About

Here at CWS Capital, we want to help you better understand forex currency investing so you can reach your maximum investing potential.

forex-market-currencies

Currencies can be an excellent method for diversifying your portfolio if it has encountered a rut in its performance. Moreover, it’s a market that can also provide enormous possibilities, even in times when traditional markets plunge into sluggish or even inactive periods.

For this reason, having a general knowledge of forex, in addition to the basics behind it, can result in many fruitful additions to an investor’s, trader’s, or portfolio manager’s repertoire.

And here at CWS Capital, we want to help you better understand forex currency investing so you can reach that point. As such, let’s review a few currencies that all traders and investors need to know about.

1. The U.S. Dollar

As the world’s unofficial reserve currency, the USD is the chief designation of the world’s biggest and most robust economy, the United States of America. And just like any other currency, the U.S. dollar is bolstered by monetary principles. Some of which include the gross domestic product (GDP), as well as production and employment records.

But the USD is also hugely affected by the central bank in addition to announcements of interest rate policy. Furthermore, the U.S. dollar is a yardstick, so to speak, used to trade against other important currencies, particularly the euro, British pound, or the Japanese yen.

2. The Canadian Dollar

Remaining current with the major currencies, the CAD (Canadian dollar), also referred to as the loonie typically trades incomparable daily ranges between 50 to 80 pips (percentage in points).

One distinct element of the CAD is its unique connection to crude oil. Canada has been and continues to be a large exporter of the product, and for this reason, many traders and investors utilize the CAD as a hedge against present product positions or simply speculation, tracking indicators emanating from the oil market.

3. The Euro

Even though the financial framework is rather complicated, the currency itself is actually quite simple. In opposition to the USD, the Euro – relative to its British pound and Australian dollar counterparts – is a much slower currency.

A typical day will see the base currency trade in the range of 70 to 80 pips, with more turbulent oscillations proportioning even more – possibly up to 100 pips wide daily.

An additional trading concern is time. Because the forex market is a 24/5 operation, traders have to strategically create and adhere to schedules for their FX trading. For example, trading in the euro-established pairs can be noticed throughout the intersection of the U.S. and London sessions—which takes place between 8 a.m. and noon EST.

Conclusion

Forex trading and investing can be a complicated subject. And a little guidance can go a long way in helping you better understand and more confidently tackle this financial realm. For this reason, if you’re a beginner who’s interested in learning more about forex trading. Be sure to download our investment guide to fill in your knowledge gap.