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We Are traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet or purse or man purse into the currency of the country you are visiting.
The Very Simple Answer Money Because you're not buying anything physical, this kind of trading can be confusing.
Think of buying a currency as buying a share in a particular country, kinda like buying stocks of a company. The price of the currency is a direct reflection of what the market thinks about the current and future health of the economy.
In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country's economy, compared to other countries' economies.
Symbol Country Currency Nickname.
USD United States Dollar Buck.
EUR Euro zone members Euro Fiber.
JPY Japan Yen Yen.
GBP Great Britain Pound Cable.
CHF Switzerland Franc Swissy.
CAD Canada Dollar Loonie.
AUD Australia Dollar Aussie.
NZD New Zealand Dollar Kiwi.
Just like in the great Star Wars world, behind the trend lines, double tops, and head and shoulder patterns, there is a fundamental force behind these movements. This force is called the news!
To understand the importance of the news, imagine this scenario (purely fictional of course!)
Let's say, on your nightly news, there is a report that the biggest software company that you have stock with just filed bankruptcy.
What's the first thing you would do? How would your perception of this company change? How do you think other people's perceptions of this company would change?
The obvious reaction would be that you would immediately sell off your shares. In fact, this is probably what just about everyone else who had any stake in that company would do.
The fact is that news affects the way we perceive and act on our trading decisions. It's no different when it comes to trading currencies.
There is, however, a distinct difference with how news is handled in the stock market and the forex market.
Let's go back to our example above and imagine that you heard that same report of the big software company filing bankruptcy, but let's say you heard the report a day before it was actually announced in the news.
The news is important to the Forex market because it's the news that makes it move. Regardless of the technicals, news is the fuel that keeps the market going!
United Kingdom: Financial Services Authority (FSA)
Australia: Australian Securities and Investment Commission (ASIC)
Switzerland: Swiss Federal Banking Commission (SFBC)
Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
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