What is currency Trading?
Find out about currency trading, the simultaneous exchange of different currencies on the market. Learn more about the largest and most liquid financial market in the world.
What is forex trading?
Find out about forex, the simultaneous exchange of different currencies on the market. Learn more about the largest and most liquid financial market in the world.
What is currency trading?
Currency trading has soared in popularity this century amongst professional and non-professional traders alike. Before the arrival of the Contract for Difference (CFD) market in the late 1990s, currency trading was an asset class that was difficult for individuals to trade or invest.
Stock and share ownership had been growing throughout the latter 20th century, while ownership of bonds was possible via investment funds. However, currencies had traditionally been the realm of large institutions – unless you were changing up currency for a holiday abroad.
What we now call foreign exchange or currency trading is the interchange of one currency for another, and it is this exchange that separates currency trading from other markets.
When you trade currencies, you are anticipating that one currency will rise or fall relative to another one. Currency trading, therefore, is a “relative value” trade, by which we mean that you look for one currency to appreciate in value and for another currency to fall in value relative to the first.
So, when trading currencies, we need to decide which currency we expect to be rising in value, and which may depreciate in value – relative to one another.