Nowadays, thanks to technological advances and the arrival of the internet, different activities can be carried out that can generate money and profits. The purchase and sale of currencies is one of the activities that has gained the most momentum in recent times due to its large dividend margin.
If you are thinking of starting a career, you can do one fxforex review eToro or simply follow us in reading. In this post we will tell you how to start trading forex and everything you need to know about this online market.
What is Forex?
The market where foreign currency purchase and sale transactions are carried out in order to obtain a profit in the fluctuation of one currency with respect to another is what is known as Forex.
In other words, an investor buys a certain amount of money expressed in a certain currency and expects its value to increase in order to later sell and obtain a profit on this transaction.
How does the Forex currency system work?
In the foreign exchange trading market, the relationship is established in pairs. That is, a user must choose the currency pair in which he wishes to invest.
Similarly, prestigious platforms such as eToro offer the possibility to trader or investors to make internal conversions and thus mutate from one currency pair to another.
There is a group of currencies within the Forex market that has become the most popular due to its stability and security. Being these:
1.EUR/USD
The relationship between the euro and the dollar in the Forex market represents the most used currency pair in the world. This has a very logical explanation, we are talking about the two strongest and most stable economies that we can find in the world.
As a curious fact, we must highlight that this is one of the youngest currency pairs that we can find today. This is because the common currency of the euro zone came onto the market in 2002.
2.USD/JPY
This is one of the currency pairs that is also very popular for a very important reason. The value of the Japanese currency is extremely low against the US dollar.
There is a type of investment called “Carry trade”, which is the most used, since investors can borrow money in a certain country that has low and accessible interest rates. The loan money is used in countries that have higher interest rates.
In fact, in Japan, its central bank has had to establish continuous policies to combat low inflation rates and high growth for many years in a row.
This relationship has caused novice investors or traders to take refuge in this pair of currencies at a specific time when economic uncertainty reigns in the market.
3.GBP/USD
In any transaction where the pound sterling is involved there is a high degree of security and trust. In fact, before the dollar was considered the most stable and strongest currency in the world, the pound sterling was the currency used to measure international reserves.
4.USD/CHF
For many people it may seem strange to get the Swiss currency in a market as fluctuating as the Forex. Especially due to the fact that the swiss economy it is not considered one of the largest when compared to other economies such as the euro zone, Asia and Great Britain.
This relationship between these currencies works in a similar way to that of the Japanese yen. In other words, the Swiss franc works as a safe haven, which is why it has become one of the most used currency pairs in relation to the US dollar at times when there is a lot of economic uncertainty.
The presence of the Swiss franc among the four major currencies may seem strange at first glance. After all, Switzerland is not one of the big economies like the eurozone, Japan and the UK.