Currencies Trading for Beginners - Main Information, Trading Basics, Cryptocurrencies

Currencies Trading for Beginners - Main Information, Trading Basics, Cryptocurrencies

Trading in the Forex market has long been one of the main instruments for traders. The foreign exchange market is the largest financial market globally, and the daily turnover can reach five trillion dollars. Every day the number of participants in this market increases, making it even more in demand in modern realities.

What makes Forex so popular? The main advantage of currency investment is that this market is not regulated by any organization, so that anyone can become a participant in trading. Among other benefits, you can trade any amount of currency due to high liquidity, and there is also access to a trading platform 24 hours a day except weekends.

So, if you have chosen this direction in trading for yourself, you can achieve significant profits with the right approach and strategy for trading.

Most Influential Market Participants

It is possible to single out the market participants who have the most significant influence on its environment.

  • Central banks

The main tasks of these institutions as market participants are to stabilize the exchange rate of the national currency unit and exchange rates.

  • Commercial banks

Their task is to ensure market liquidity.

  • Hedge funds

Hedge funds are becoming more and more influential market participants. It is due to the use of primarily aggressive trading strategies and increased sales.

  • Brokerage companies

Brokerage companies give traders access to the market, acting as an intermediary between forex and traders.

  • Investors

Investors perform speculative transactions using their funds to profit from price fluctuations in the market.

Currencies Trading Instruments

The main instrument of this market is currencies and foreign exchange transactions. Currencies with high liquidity are in the most significant demand. The largest percentage of all transactions in the Forex market has the US dollar, which has proven itself over the years as a reliable currency. It is also because the United States has a stable and developed economy. The second most sold currency is the euro.

Сurrencies Trading Basics

How to trade currencies and make money? To successfully enter this market and not lose your money, you need to understand two basic concepts of trading currencies.

Exchange rate

The exchange rate is the value of a currency expressed in another currency. It is not an abstract concept, which is also called a currency pair. The price of one asset is expressed in monetary units of the other asset. Exchange rates can be of two types.

Basic exchange rates are currency pairs, one of which is the US dollar. For example, EUR / USD.

Cross rates are pairs in which the US dollar is absent, or the second currency is not freely convertible. For example, EUR / GBP. Cross courses have a more complex structure and are divided into a basic, commodity, and exotic.

Basic cross-rates

They have this name because most of the operations using cross rates happen using such currencies. Currency pairs of such rates usually consist of stable and liquid currencies that can circulate on the market independently, without the participation of the dollar.

Commodity cross-rates

Commodity currency is the currency of a country which economy is focused on selling raw materials for further production. Accordingly, commodity cross rates represent a pair of currencies in which at least one may be classified as a commodity currency. There are two nuances for organizing cross rates. Firstly, if one of the currencies is the US dollar, such a pair is referred to as the main course. If one of the currencies is not freely convertible, such a pair is counted among the exotic cross rates.

Exotic cross-rates

The riskiest transactions for traders are performed using such currency pairs. Exotic cross rates are the rates of those currencies that cannot be traded in the market independently. In this case, to sell such assets, you must first buy the US dollar and then convert it to this currency. The market of such currencies is not liquid, and they are rarely used for trading.

Currency Quote, Liquidity, and Volatility

A currency quote is a price at which the seller and the buyer have agreed to exchange currencies.

Liquidity is the ability of one asset to be exchanged for another in the shortest possible time. It depends on demand, the number of market participants, and the value of the exchanged asset. Forex is the most liquid market, but there are many low-liquid assets of little interest to traders even here. During periods of high liquidity, price changes occur very often. Market liquidity also tends to decline during the holidays.

Volatility is the ability of an asset’s price to change over time. The lower the volatility of the market, the less chance of unexpected price changes that could lead to financial losses. So low volatility markets are the most popular and relevant for traders.

Cryptocurrency Trading

Cryptocurrencies are digital money that is not tied to real currencies. Users of peer-to-peer networks create them. Nowadays, cryptocurrency trading is gaining popularity every day because it has many advantages. You can profit from both the growth and the decline in the price of a currency.

Features of the cryptocurrency market:

  • Open 24/7;
  • Possibility to use high leverage;
  • Limiting risks;
  • The ability to trade with fiat currencies.

Additional advantages of cryptocurrency trading are the low attachment of these assets to the political and economic situation and their dependence on supply and demand.

Nevertheless, it is pretty challenging to predict the value of a particular cryptocurrency. It can fluctuate widely for a short period and bring both large profits and losses, depending on the correct analysis of the market situation.

Popular Cryptocurrencies

Bitcoin is the cryptocurrency that opened the way for everyone else. It remains the most popular and used worldwide. The cost of bitcoin has grown from 1309 bitcoins for one dollar to a record 62 thousand dollars for 1 BTC throughout its existence.

Ethereum is a whole system that can answer even the most complex requests, and many banking institutions are paying more and more attention to this cryptocurrency.

Litecoin is a currency similar to bitcoin that has been around for a long time. The main difference is the time it takes to create one block of currency. Litecoin is created four times faster, but it isn’t easy to mine.


Trading currencies opens up many opportunities for a trader to make a stable profit. Currency trading today remains one of the most popular and liquid trading options. You can trade at any time, and there are various trading assets in this market that drive Forex’s growth to this day.

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