You are a currency trader if you travel abroad and have exchanged your own countries currency for the currency of the country you are traveling in. That trade is called FOREX (Foreign Exchange Currency). According to the Triennial Central Bank Survey of Foreign Exchange and Derivative Market Activity conducted in 2007 by the Bank for International Settlements, daily there are $3.2 trillion dollars generated in transactions on the forex market, making it the silent sovereign of finance, reigning over every other capital market in its realm. Though the FOREX market size may be overwhelming, the concepts behind trading currencies are very simple.

Let’s view some basic concepts all forex investors must understand…

Eight Majors

In the stock market investors may have thousands of different stocks to follow and choose from, whereas the currency market has only eight major economies you need to follow and then determine the best undervalued and/or overvalued opportunities they might provide. The following countries are regarded as the eight majors – having the majority of currency market trade:

• USA
• Eurozone (pay attention to France, Germany, Italy and Spain)
• Japan
• UK
• Switzerland
• Canada
• Australia
• New Zealand

Within these economies are the largest and the most sophisticated finance markets in the world. Strict focus on just these eight majors can present advantage to earning interest income from the finance markets’ most creditworthy and liquid instruments.

Economic data released daily, very often, from these countries, allows an investor to stay at the top of their game when assessing the economic health of each of them and their finances.

>>>  Click here to read Part 2 of Currency Trader Basics  >>>