The (Foreign Exchange) Forex Trading Market Explained.

Defining Exotic Currencies and Their Impact on Forex Markets

The exotic currency is defined as a currency with little liquidity and limited dealing. The exotic currency is neither a minor nor a major currency. Some of the currencies that are considered minor are the Australian dollar, the Canadian dollar and the New Zealand dollar. Some of the currencies that are considered major are the Japanese yen, the Euro, the British pound, the Swiss francs and the German mark. All exotic currencies play a very important role in the forex market and are just as important as all the major currencies.

The foreign exchange market has played a very important role as the sole domain for financial institutions, most major banks and for the central banks like the United States Federal Reserve. The foreign exchange market has made some substantial profits that are made annually by these banks and financial institutions and these are now offered to you.

All countries are now becoming more dependent on one another due to the increase in worldwide trade and foreign investments. The state of a country’s economic activity can cause the country’s currency to fluctuate, considering how the economic factors can alter the structure of a currency’s interest rate. The monetary health of a particular country depends on whether the currency either appreciates or devalues.

Some banks make between 40-60% of their profits from trading currencies when they allocate around 20-30% of their funds into the foreign exchange market. Until recently, the American public has been unaware of the forex market because the foreign currency market had not been financially accessible to the general population of traders and investors; also, because of the minimum account requirement, which was beyond the means of the average trader or investor. Now that the situation has changed, instead of needing a minimum of $200K to open an account, a mere $10K can be used to open an account.

The foreign exchange market is dominated by these five major currencies: the U.S. dollar (USD), the British pound (GBP), the Japanese yen (JPY), the European euro (EUR) and the Swiss franc (CHF). All five of these currencies rank highly in their activity and popularity thus accounting for more than 70% of trading in North America alone. Other currency’s that are traded, though not as easily, are the more exotic currencies including the New Zealand dollar (NZD), Australian dollar (AUD), Canadian dollar (CAD) and the French franc(XPF). The minor currencies, which can also be considered as exotic currencies, account for between 3-7% of the total market volume. Together, all the major and minor currencies represent all the hard currencies that are currently being traded in the forex market.

Top three most traded currency in the world:

The U.S. dollar Index is the currency that gives relative strength to the Dollar. The Index reflects the statistical weaknesses or strengths of the trend of the U.S. dollar (USD). If the index figure is fairly large, then the U.S. Dollar is stronger, likewise if the index figure is smaller, then the U.S. dollar has become weaker. The Dollar has become weaker over the past two decades, mostly because of the world’s low opinion of financial policies that result in prominent budget deficits.

The European euro and Europe has taken its first steps toward what many economists call “Euroland” with its single currency, the Euro. Europe’s eleven nations that use the euro are: France, Spain, Belgium, Italy, Portugal, Austria, Finland, Luxembourg, Ireland, the Netherlands and Germany. These eleven nations consist of about 300 million people and also account for almost 20% of the worldwide economy. The European Union in addition represents America’s largest foreign market, which is twice the size of Japan and Canada combined. Trade flows between Europe and the United States has been roughly in balance for over nearly a quarter of a century, whereas in Asia, the U.S. runs large trade deficits.

Japan, along with its Japanese yen, continues to be one of the most undisputed global economic powers of today’s market place. Since WWII, the Japanese government has been applying all of its energy and resources into developing its economy into one of the biggest economic powers in the world. The Japanese yen has become the third most traded currency in the world.



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Introduction to Online Forex Trading
Current Forex Currency Rates
Forex Trading
How to Get Started In FOREX Trading
FOREX versus Futures Market
FOREX versus Stocks
FOREX Trading Philosophy
Fundamental Analysis In Forex Trading
Forex Technical Analysis - Part 1
Forex Technical Analysis - Part 2
FOREX Trading Strategies
Trading Currencies on Margin
Currency Option Marketplace
FOREX Signals
How to Read FOREX Quotes
Calculating FOREX Profits and Losses
Risks of FOREX Trading
FOREX Training
FOREX Trading Software
FOREX Brokers
FOREX Glossary
Forex Updates and Training
Crash Course in Forex Education
How to Recognize Patterns in Forex Trading Markets
Defining Exotic Currencies and Their Impact on Forex Markets
Defining Trading Trend and Ranges in Forex Trading
Mind Games – The Psychology of Forex Market Trading
Crossing Currency - What’s This Mean to Forex Traders
Money Management Basics for Forex Traders
Choosing Your Forex Broker
Expensive Beginner Forex Trader Mistakes
The Elliott Wave Theory for Forex Markets
Failsafe Facts to Guarantee Failure in Forex Trading
Five No Nonsense Strategies in Forex Trading
Global Expansion and It’s Reaches within the Forex Market
Hedging in the Forex Market
The Important Ways to Keep From Losing in the Forex Markets
An Overview of the Euro’s Performance in the Forex Markets
Six Trading Tips for the Forex Newbie
The Lowdown on Day Trading
Interpreting How Interest Rates Drive the Foreign Exchange Markets
The Basics of the Bollinger Band Technical Indicator in Forex Markets
Relative Strength Analysis in Forex Trading
The Basics on Understanding Forex Options
Forex Charts – What Are They and How Do You Read Them
Interpreting the Future of the Oil Marketplace and How It Affects Forex Trading
Top Five Economic Indicators that Drive Forex Trading
Rules for Trading in Forex Markets
How Does the Japanese Yen Stack Up Against the US Dollar in Forex Markets
Pivot Points in Forex
The Ins and Outs of Trying Out a Forex Demo Account
The Top Currencies to Watch in the Forex Trading Game
Defining Moments Regarding Trading Trends and Ranges with Forex
Top Ten Basic Terms in Forex Trading and Their Definitions
Forex Folklore Investment Myths in the Market
Five Economic Driving Forces that Influence Forex Trading
Day Trading All You Wish You Did Not Have to Know
Time line for Daily Forex Trading When are the Optimum Moments
Forex Relative Strength Analysis
How Forex Quotes Can Influence your Trading Tactics
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