Dr Kelli DuCloux: How to start investing in foreign currencies

The FOREX stands for the Foreign Exchange market. It is the global currency market for trading currencies and is the largest market in the world, billions of dollars greater than the New York Stock Exchange (NYSE).

Financial centers around the globe trade and invest in the FOREX. It encompasses all the stock market exchanges including the Tokyo Stock Exchange (TSE), the Australian Stock Exchange (ASX), the London Stock Exchange (LSE), and of course the NYSE. The FOREX determines the relative values of the various world currencies across the globe.
The FOREX, with its global currency exchange, is also an awesome way for regular folks to invest. One of the reasons why it is easy to invest in the FOREX is because it is an open market that is available from Sunday at 2pm to Friday at 1pm (PST). Another reason is because YOU have the power to invest as you please, meaning you don’t have to ask a broker to place a trade for you or to even recommend “good stocks”.
Also, within the FOREX, you can actually make trades with as little as a few hundred dollars. I personally have made trades with only $200 in my account. This article will address another reason why investing in the FOREX is easy and that is because there are a limited number of Currency Pairs.
Unlike the NYSE which has an overwhelming number of stocks, with everything from Microsoft with ticker symbol MSFT to Google with ticker symbol GOOG, the FOREX has a finite number of trading symbols. Each of these symbols is connected or ‘paired’ with another symbol. All of the symbols represent the currency or “money” for a particular country. For example, the symbol of the Japanese currency is JPY, the symbol for the currency in Canada is CAD, and the symbol for the European currency is EUR.
So, the pair for the European currency and the Canadian currency is EURCAD. Similarly, the pair for the Canadian currency and the Japanese currency is CADJPY. The currency pairs can be categorized into “families”. We can list all the currency pairs that have the currency for Great Britain. We can also list all the currency pairs that have the American currency. Let’s discuss all the Currency Pair families.
The Currency of United States
The US currency is the United States Dollar with the symbol USD. All of the currency pairs with the US Dollar are as follows:

  • EURUSD –European Euro to the US Dollar
  • GBPUSD – Great British Pound to the US Dollar
  • AUDUSD – Australian Dollar to the US Dollar
  • NZDUSD – New Zealand Dollar to the US Dollar
  • USDCHF – US Dollar to the Swiss Franc
  • USDJPY – US Dollar to the Japanese Yen
  • USDCAD – US Dollar to the Canadian Dollar
    The Swiss Franc
    The Swiss Franc has the symbol CHF. It is the currency of Switzerland. The reason it has a CH in it instead of an “S” is because Switzerland uses its old Latin name Confoederatio Helvitica which means Swiss Confederation. All of the currency pairs with the Swiss Franc are:
  • AUDCHF – Australian Dollar to the Swiss Franc
  • CADCHF – Canadian Dollar to the Swiss Franc
  • NZDCHF – New Zealand Dollar to the Swiss Franc
  • EURCHF – European Euro to the Swiss Franc
  • GBPCHF – Great British Pound to the Swiss Franc
  • USDCHF – US Dollar to the Swiss Franc
  • CHFJPY – Swiss Franc to the Japanese Yen
    The British Pound
    The currency of Great Britain is the Great British Pound or GBP. The currency pairs involving the Pound are:
  • GBPUSD – Great British Pound to the US Dollar
  • GBPNZD – Great British Pound to the New Zealand Dollar
  • GBPCAD – Great British Pound to the Canadian Dollar
  • GBPAUD – Great British Pound to the Australian Dollar
  • GBPCHF – Great British Pound to the Swiss Franc
  • GBPJPY – Great British Pound to the Japanese Yen
  • EURGBP – European Euro to the Great British Pound
    The Australian Dollar
    The Australian Dollar has the symbol AUD and its currency pairs are as follows:
  • AUDUSD – Australian Dollar to the US Dollar
  • AUDCHF – Australian Dollar to the Swiss Franc
  • AUDCAD – Australian Dollar to the Canadian Dollar
  • AUDJPY – Australian Dollar to the Japanese Yen
  • AUDNZD – Australian Dollar to the New Zealand Dollar
  • EURAUD – European Euro to the Australian Dollar
  • GPBAUD – Great British Pound to the Australian Dollar
    The European Euro
    The Euro is the official currency of the Eurozone. The Eurozone is a conglomerate of 19 of 28 member states of the European Union. They are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. The Euro was introduced on January 1, 1999. The currency pairs with the Euro are:
  • EURUSD – European Euro to the US Dollar
  • EURGBP – European Euro to the Great British Pound
  • EURJPY – European Euro to the Japanese Yen
  • EURCHF – European Euro to the Swiss Franc
  • EURCAD – European Euro to the Canadian Dollar
  • EURAUD – European Euro to the Australian Dollar
  • EURNZD – European Euro to the New Zealand Dollar
    You will notice that the Euro is always located as the first currency within a currency pair. The first currency listed is known as the “base currency” and the second is called the “quote currency”. And just as a reminder, the currency pair price tells you how much of the ‘quote’ currency you get for one unit of the ‘base’ currency. So, given the following: EUR/USD = 1.1295, this means that for one Euro you can get $1.12 American Dollars in exchange.
    The Japanese Yen
    The Japanese Yen is another currency that holds a stable position no matter which other currency it is paired with. The JPY is always in the quote position. The currency pairs for the Japanese Yen are:
  • USDJPY – US Dollar to the Japanese Yen
  • EURJPY – European Euro to the Japanese Yen
  • GBPJPY – Great British Pound to the Japanese Yen
  • AUDJPY – Australian Dollar to the Japanese Yen
  • CHFJPY – Swiss Franc to the Japanese Yen
  • NZDJPY – New Zealand Dollar to the Japanese Yen
  • CADJPY – Canadian Dollar to the Japanese Yen
    The CanadianDollar
    As we learned earlier the Canadian Dollar has the symbol CAD. Its currency pairs are:
  • USDCAD – US Dollar to the Canadian Dollar
  • NZDCAD – New Zealand Dollar to the Canadian Dollar
  • GBPCAD – Great British Pound to the Canadian Dollar
  • EURCAD – European Euro to the Canadian Dollar
  • AUDCAD – Australian Dollar to the Canadian Dollar
  • CADCHF – Canadian Dollar to the Swiss Franc
  • CADJPY – Canadian Dollar to the Japanese Yen
    The New Zealand Dollar
    The last major currency is the New Zealand Dollar. The symbol for it is NZD and its currency pairs are:
  • NZDUSD – New Zealand Dollar to the US Dollar
  • NZDCHF – New Zealand Dollar to the Swiss Franc
  • NZDCAD – New Zealand Dollar to the Canadian Dollar
  • NZDJPY – New Zealand Dollar to the Japanese Yen
  • AUDNZD – Australian Dollar to the New Zealand Dollar
  • GBPNZD – Great British Pound to the New Zealand Dollar
  • EURNZD – European Euro to the New Zealand Dollar
    Other Currencies
    Here are a few other currencies that are traded on the FOREX. However, they are not considered major currencies and most people do NOT trade with them. I just wanted to inform you of them. The CNH is the Chinese Yuan. The CNY is another abbreviation for the Chinese Yuan.
    The SEK is the currency for Sweden.
    The NOK is the Norwegian Krone.
    The SGD is the Singapore Dollar.
    The TRY, the Turkish Lira, is the currency of Turkey.
    The ZAR, the South African Rand, is the currency of South Africa
    The RUB is the currency of Russia. It is the Russian Ruble.
    The DKK is the currency of Denmark.
    The Eight Most Commonly Traded Currencies
    Despite all of the major currencies that are presented above, there are several that are more popular for professional traders. These currencies are popular due to their country’s economic or political stability as well as their liquidity.
    Here are the most commonly traded currencies:
    USD, CAD, EUR, GBP, CHF, AUD, NZD, and JPY.
    The most widely usedcurrency pairs in the FOREX
  • EUR/USD
  • EUR/JPY
  • GBP/USD
  • GBP/JPY
  • USD/JPY
    Other currency pairs that are traded frequently include the other combinations of the eight strong currencies listed above, such as NZDUSD, GBPCHF, USDCHF, AUDCHF, and CADCHF to name a few. Each currency pair has its own character traits. Some trade along with the price of oil. Some trade in a more unidirectional pattern depending on which global market hours are open (The London market, the Asian market, etc.) Also know that you will find similar activity within the families. So, for instance, if the Euro takes a dive and drops, you will notice –generally – that across all the pairs with the EUR, the price will go down. The EURUSD will be down. The EURJPY will be down. The EURCAD will be down. You can even go from one chart to the next and see a drop in price at the same time across all the EUR currency pairs.
    In my other book, I recommended that beginners start with just one currency pair and do trades, maybe 50 or even 100, in their play money account and get to know how that one currency pair behaves.
    You can get an idea of when it moves the most, how far it moves http://amzn.com/B00SFHL2ES, the direction of movement, what news affects it http://amzn.com/B00SWROO3W, etc.
    However, by only trading that one currency you get your confidence up. Then, when you feel like you have a strong understanding of trading, you can move to your personal account and start trading live money. http://amzn.com/B00S83FK24 This book shows you how to get started in a step-by-step “hold your hand” way.
    My other manual http://amzn.com/B00S3GA2A6 detailed a profit of about $400 in one day. I show EVERY trade I made that day and how much money was made from it.
    I hope this article about the currency pairs has been helpful. I’m confident that you have learned at least ONE new thing about trading in the FOREX
Comments
No. 1-1
jfthomas05
jfthomas05

Amazing info and a great list to go by just in case I wanted to invest in a certain government's currency. This is invaluable because most of us wouldn't even know where to "start".