An introduction to financial markets

Open a forex account Today ! In this brief introduction to the global financial markets, we take a look at some of the key markets that are available to trade, along with an outline of factors that you should consider before making your decision.

Introduction to Order Types

So, what is the financial market? Online financial markets are broad and can vary from world currencies to virtual currencies, shares to bonds and raw materials to stock market indices, where traders can invest into securities and derivatives at a low transaction cost. Read further to discover the world of financial markets and their wide range of assets.

Forex market trading

The forex market is the world’s largest and most active trading market, as well as being the most liquid. While foreign exchange trading has long been dominated by large global banks and institutions, it has become increasingly popular and accessible to individual investors.

Euro US Dollar (EUR USD) Exchange Rate

Trading currencies is done slightly differently to other asset classes. Trading in other assets involves trading in one market with profit and loss based on absolute returns. For example, if you buy and the market goes up, you make money. If you buy and it goes down, you lose money.

What are indices?

Forex trading is done using currency pairs, with one currency being traded against another. Returns in currency markets are relative, with profit and loss being measured by how one currency performs relative to another. For example, on a given day, the US dollar (USD) could appreciate relative to the euro (EUR), Swiss franc (CHF) and British pound (GBP), but decline relative to the Japanese yen (JPY), Canadian dollar (CAD) and Australian dollar (AUD).

Introduction to Financial Markets

As the world’s reserve currency, trading in US dollar-related currency pairs is the foundation of currency trading around the world. The most active pairs (also known as the major forex pairs) include EUR/USD, GBP/USD, USD/CHF and USD/JPY. Popular cross pairs include GBP/EUR, EUR/JPY and AUD/CAD.

Basics First: An Introduction to Forex Signals

Pricing in currencies is based on the first currency in the pair, also known as the base currency. In the case of EUR/USD, this means how much USD it would take to buy one EUR. When EUR/USD goes up it means that EUR is gaining in value and when it goes down, it means EUR is losing value against the USD.

These represent a significant part of the goods traded by these countries. Note that CAD and NOK tend to be more sensitive to energy prices, AUD and NZD to metal and grain prices and ZAR to precious metal prices

An introduction to financial markets