By being a trader you will be dealing with the Foreign Exchange Market. So, you will be exchanging one currency for another. First, let’s have a look at some of the world’s currencies below:
And so, we can imagine a currency will be of higher value if the economy it relates to is strong. Different factors influence the fluctuation of each currency on a day to day basis. Some of these factors include the Unemployment Rate, Bond Auctions, Construction Output, Mortgage Applications, Economic Projections, Interest Rate Decisions and other factors we will explore in detail later.
By knowing when the individual Countries news are out, and having the ability to make a reasonable prediction on how those results will come out can make us a fortune on a consistent basis. This being said, we will need to know news for two separate Countries, as the Forex Exchange Market involves the simultaneous Buying and Selling of a currency pair. Let’s have a look at the Major Currency Pairs below:
|Currency Pair||Countries||Pair’s Nickname|
|EUR/USD||Europe / United States||“Fiber, Fibre”|
|USD/JPY||United States / Japan||“Ninja, Sushi, Yen”|
|GBP/USD||United Kingdom / US||“Cable”|
|USD/CHF||United States/ Switzerland||“Swissy”|
|USD/CAD||United States / Canada||“Beaver, Loonie, The Funds”|
|AUD/USD||Australia / United States||“Ozzie, Aussie, Matie”|
|NZD/USD||New Zealand / United States||“Kiwi”|
Let’s assume that you have determined that the Euro will grow stronger, while the Dollar will weaken. This means that the EURUSD graph will rise, or in Trader’s terms – be Bullish. You will then Buy (or go Long) see the rise happen, close the position and make profits.
The other scenario is that the Euro will weaken, while the Dollar grows stronger. This means that the EURUSD graph will fall, or in Trader’s terms – be Bearish. You will then Sell (or go Short) see the fall happen, close the position and make profits.