The Traded Currencies

Forex trading in recent years has been widely accepted by many corporations, institutions and individuals as a effective and efficient investment tool. It is also considered a vital hedging tool against currency exposure with flexibility and liquidity. Trades are executed in standard contract sizes and most currencies can be traded in any matched pair.

The seven major currencies of Forex – The Dollar, Euro, British Pound, Japanese Yen, Swiss Franc, Canadian Dollar and Australian Dollar - dominate the overall market. Seventy-six percent of all trades have both currencies in the currency pair as a major, and more than 98% of all trades involve at least one major.

The most common currency pairs are EUR/USD (30%), USD/JPY (20%), GBP/USD (11%), USD/CHF (5%), USD/CAD (4.3) and USD/AUD (4%), which together totals about 75 % of all Forex spot trades.

Margin Requirements

Each contract can be traded by depositing a fraction of the contract value, referred to as a Margin Deposit. Profit/Loss is realized through the fluctuation of the Foreign Currencies which allows investors to reap a high return with a minimum capital exposure. You can enjoy the benefits of leverage on contracts up to one hundred times your margin deposit. That is, with approximately 1% of the absolute value of contracts, you can enter the largest marketplace in the world. As long as you are able to maintain your margin requirements on the full contract value, you can remain indefinitely in the market. However, like all speculative investments, there is a potential risk for loss under unfavorable market conditions.