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currency markets

The world of online foreign-exchange trading has grown rapidly in recent years, especially here in Australia. As currencies are traded in pairs, the aim is to take advantage of exchange-rate fluctuations and as such there are always trading opportunities; as one currency is going down- the one that it is paired against is simultaneously going up.

The FX market is highly favoured amongst short-term and day-traders due to it’s high liquidity, low trading costs, 24 hour operation and high level of activity (not to be confused with high volatility).

Key considerations:

  • The largest highest liquidity market In the world
  • 24-hour trading opportunities from Monday morning to Saturday morning
  • Relatively low trading costs
  • Considered to be the best trending market in the world
  • Can be traded using high leverage- increases risk and reward potential

They key point to understand when trading currencies that they are traded in pairs, for example- the AUD/USD pair. As such; when you buy the AUD/USD pair you are buying AUD while simultaneously selling USD. If the AUD appreciates against the USD then the trade can be closed out for a profit. The reverse applies also. in that if the AUD were to weaken against the USD then a loss would be incurred.

The available leverage (gearing) in FX is the highest of any market this is due to the fact that it has the highest liquidity (turnover) and the fact it trades 24 hours per day 5.5 days per week.

This high leverage has given FX the reputation of being overly risky· and it can be when the leverage is not used properly. However, it’s important to understand that the only reason that a broker offers high leverage is that the high liquidity and 24 hour operation actually translates to the ability to manage risk more effectively.

Additionally. while the FX markets move more actively, their average daily movements (particularly the major pairs) are less than most other markets- they are less volatile. The currency market is regarded as the best trending markets in the world, in other words; once it chooses a direction- it’s more likely to continue in that direction more consistently and for a longer period of time.

“When you really believe that trading is simply a probability game, concepts like right or wrong or win or lose no longer have the same significance.” – Mark Douglas

This website is owned and operated by Investor Unity Pty Ltd (ABN: 90 160 624 331). Any advice included in this website or correspondence is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. In addition to its internal services, Investor Unity is compensated by brokers and other third parties by way of referral/affiliate and/or general partnership arrangements, via its websites and other communications.

Investor Unity is genuinely interested in your long-term trading & investment success. We advise you to take all necessary steps to ensure you have a good understanding of the products & services you’re considering investing in – particularly if they involve leverage. While Investor Unity takes every care to ensure that we only deal with the highest quality services, from throughout the industry, past performance is not a guarantee of future performance. Other risks are also invloved, some of which are listed at www.iu.com.au/risk, which should be read. Before making an investment or trading decision based on the general advice, the recipient should carefully consider the appropriateness of the advice in light their financial circumstances and should carefully review the PDS of the relevant financial product as provided by your investment broker. Past results are not a guarantee of future performance. Please contact us, to discuss any questions or concerns you may have- we are here to help.

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