Monday, December 19, 2011

Forex - The Most Traded Currency

Forex - The Most Traded Currency
By [http://ezinearticles.com/?expert=John_J._Drummond]John J. Drummond

In the Forex market, you can trade a large number of currencies: dollars, Yens, Euro, Francs and so on. These are some of the widely known currencies and there are also a large number of less commonly traded currencies such as the Israeli Shekel, Jordanian Dinar, Brazilian Real, and so on.

But which of these is the most popular currency? Which is traded the most?

In truth, this question is slightly misstated. In Forex you don't trade a single currency, you trade a currency pair, one currency against the other. For instance, if you're buying the USD/JPY pair, you're buying US dollars with Japanese Yens, if you're selling this pair, you're selling US Dollars for Yens.

The most heavily traded currency today is the EUR/USD. The Euro, which is used in over 15 countries in Europe and the American Dollar constitute a large percentage of the entire trading volume in the market. In fact, no other currency even comes close.

The other heavily traded currency pairs, called the Majors include the USD/JPY, GBP/USD, USD/CHF, AUD/USD, and CAD/USD. As you can see, the US Dollar is present in all of the major currency pairs making it the most traded single currency. Again, in Forex there is no such thing as single trading any currency but if you insist then this is the one.

What does it mean?

It means that the state of the American economy and the market sentiment toward it have a dramatic effect on the entire Forex market. It influecnes the major currency pairs and a huge proportion of the trading volume. Paying close attention to the US economy and the American currency takes on a greater significance for any Forex trader worth his salt.

The amazing thing is that you can focus your time and effort on any of the major currency pairs and dedicate all of your trading to that pair. The volume in each of these pairs is so great that it can be enough to make a full time living, if done right, of course.

While the EUR/USD is the most heavily traded pair, each of the other majors has an immense volume as well, making market manipulation more difficult and giving room for trading systems to operate in an open market.

So, study the US Dollar well and you may have all you need to profit in Forex.

For a high probability system to trade currencies visit [http://forexseer.com/lmt-forex-formula-review/]LMT Forex Formula Review

For Forex trading news and analysis visit http://ForexSeer.com

John Drummond works from home. He writes often on business, trading, and finances.

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