Although there are other traded pairs outside of the 18, the eight currencies most often traded are the U.S. The majority of the volume in currency trading is confined to only 18 currency pairs compared to the thousands of stocks that are available in the global equity markets. Some currencies move as much as 100 pips or more in a single trading session making the potential losses to the small investor much more manageable by trading in micro or mini lots. In a mini lot, one pip equals $1 and that same one pip in a standard lot equals $10.
This makes losses easier to manage if a trade doesn't produce the intended results. Retail or beginning traders often trade currency in micro lots, because one pip in a micro lot represents only a 10 cents move in the price. A mini lot is 10,000 units of your base currency and a standard lot is 100,000 units. dollars, a micro lot represents $1,000 of your base currency, the dollar. The micro lot is 1,000 units of a currency. trading session.Ĭurrency is traded in various sized lots. Traders who stay with pairs based on the dollar will find the most volume in the U.S. This means that certain currency pairs will have more volume during certain sessions. Although there is some overlap in the sessions, the main currencies in each market are traded mostly during those market hours. There are three sessions that include the European, Asian and United States trading sessions.
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The market may be large, but until recently the volume came from professional traders, but as currency trading platforms have improved more retail traders have found forex to be suitable for their investment goals.Ĭurrency trading is a 24-hour market that is only closed from Friday evening to Sunday evening, but the 24-hour trading sessions are misleading. Each day, it accounts for roughly $1.5 trillion of daily trading compared to only $25 billion of daily volume on the New York Stock Exchange (NYSE). The currency market, or forex (FX), is the largest investment market in the world. SEE: Top 7 Questions About Currency Trading Answered. So, what is currency trading and is it right for you? Trading in any investment market is exceedingly difficult, but success first comes with education and practice. The investment markets can quickly take the money of investors who believe that trading is easy.
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