How to buy and sell currency

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There are many forms of trading strategies, ranging in risk and make up. These strategies may require different forms of analysis, including quantitative to technical analysis. Each type of strategy can be successful depending on how they are used, and there is not one that is better than any other. Rather, the best portfolio is one that is well suited to the individual investors particular needs. Some traders would rather keep a low risk portfolio over the long term, while some are more concerned with making money very quickly. Learning how to make money trading is achievable, although you should be mindful of the risks.

There are many reasons to become involved in trading which may require different forms of trading strategies and products. It is important to match products with the needs of a portfolio. A more diversified portfolio, for instance, across industries and regions, and containing different instruments such as blue-chip equities and debt instruments is often considered less risky. However, low risk portfolios, while safe, do not typically make a lot of money and are not often referenced when discussing how to make money trading. It is important to consider your own circumstances before trading or investing. If in any doubt, you should consult an independent financial adviser before investing.

Key principles of how to make money trading include:

  • Know your entry and exit points of a trade
  • Hedge your bets to ensure losses are not too significant
  • Be disciplined
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  • Have a long enough time horizon for gains to realize
  • In the case of losses, accept them and try to move on
  • Take care to mitigate your risk when using margin, as both gains and losses can be accentuated
  • Know your companies and markets. The more information, the better

When learning how to make money trading, investors may choose to use both short and long trades. Going short involves selling a company that the investor does not currently own with the expectation that price will decrease. Then, the trader can buy the asset at a lower price and return it to the entity borrowed from. Going long is when an investor purchases the asset with the expectation that the price will increase. This typically occurs over a longer period of time. If trades are completed within one day (both bought and sold, or sold and then bought as the case may be) they are considered day trades. Day trading is one particular style of trading, and one of many methods of how to make money trading.

Accendo Markets unique content can help an investor learn how to make money trading. Reports and trading opportunities cover the basics of analysis, including the fundamentals of chart analysis and detailed information on financial products. More than this, Accendo Markets content includes information on industries and regions to help investors make informed trading decisions. Our reports also cover detailed trading strategies specific to commodities, foreign exchange, CFDs and more.

When engaging in any trading style, it is important to remember there are many risks. While the possibility for gains are significant, the chance to lose is also significant. However, with Accendo Markets platforms, which offer detailed information on industries and assets, as well as reports on trading strategies and analysis, learning how to make money trading is made as achievable as possible. Whatever you do, ensure you give sufficient consideration to your risk management strategies, such as utilising stop-losses.

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How to buy and sell currency

How to buy and sell currency

When it comes to buying and selling forex, traders have unique styles and approaches. This is because the forex market is one of the most liquid and largest in the world and as a result there is no one single way to trade.

Knowing when to buy and sell forex depends on many factors, but there tends to be more volume when markets are volatile because of the associated higher risk. This article will explore the concept of buying and selling currencies using practical examples as well as additional resources to boost your forex trading experience.

What it means to buy and sell forex

Buying and selling forex pairs involves estimating the appreciation/depreciation in value of one currency against the other. This could involve fundamental or technical analysis as a foundation of the trade. Once a basis has been formed, the trader will look to other technical and fundamental aspects. Key levels of entry and exit will follow, keeping in mind risk management processes.

Factors which affect currency pairs

How to buy and sell currency

Government instability, corruption and changes in government can affect the value of a currency – for example, when president Donald Trump was elected the Dollar soared in value!

From a fundamental standpoint , forex traders keep a close eye on unemployment figures, GDP, monetary and fiscal policies (just to name a few) which have influence over the value of currencies. Our economic calendar shows upcoming events which may shake up the financial markets.

Technical traders tend to favor key price levels ( support & resistance ), trends and other indicators to form a basis for their forex trades.

How to buy and sell EUR/USD

Using the EUR/USD currency pair, we will provide an example of how and when to buy or sell forex. Let’s say you want to buy the EUR/USD. If the EUR goes up in value relative to the USD once the trade is sold, you could have made a profit (depending on commission and other fees). A trader in this example would be buying the EUR and selling the USD at the same time. As an example, if the EUR/USD pair was bought at 11300 and the pair moved up to 11504 at the time that the trade was closed/exited, the profit on the trade would have been 204 pips . This is shown in the chart below.

How to buy and sell currency

In this example the technical perspective was utilized:

  • Entry level – Morning star candlestick pattern shows a potential entry point, which was substantiated by the use of the RSI indicator which displays an oversold signal.
  • Exit level – Using key price levels of to set initial take profit level.

Similarly, a fundamental trader could trade the USD/JPY currency pair by following political and economic news. For example, if a fundamental trader expected the Fed to hike interest rates , this may attract greater foreign investment into the US, and thus more demand for the home currency (USD). The trader could then look to enter into a long (buy) position in anticipation of the USD to appreciating in value. Of course, this is not absolutely certain as economic principals/theory do not always translate to real world conditions. Taking short positions on forex pairs is slightly more complex as opposed to buying. Read more on how to short forex to gain more insight.

Understanding risk management when buying and selling forex

Risk management is essential to longevity in forex trading. This does not simply include a positive risk/reward ratio but understanding the potential swings in volatility as well. Factors affecting forex pairs can have significant impacts at times so preventing adverse effects on your trade can be managed by implementing proper risk management techniques. Buying and selling forex can be complex, therefore understanding the mechanics behind it, such as h ow to r ead c urrency p airs , is essential prior to initiating a trade. We also recommend reading our forex guide for beginners to get a crash course on the basics of forex trading.

If you need to buy currency in the form of cash, there are several options to explore.

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There are many providers that allow you to buy and sell foreign currency electronically. However, sometimes you need foreign currency in the form of cash. You may simply prefer to have cash for an upcoming holiday, or you may need to make an international purchase with a merchant that only accepts cash.

Whatever the reason, here’s what you need to know about buying foreign currency as cash.

How does buying currency work?

You can buy foreign currency through your local bank, though you may not receive the most competitive exchange rate. Specialist currency exchange providers with storefronts allow you to go in and physically buy cash in the same way that you would make any other purchase. You tell them how much of a particular foreign currency you need and they will tell you how much it will cost you in US dollars.

The price in US dollars will be dependent on the exchange rate offered by the provider, so it is important to shop around to ensure you’re getting the best deal. These exchange rates change daily, so do a comparison on the day that you’re planning to buy the currency. Also check what, if any, transaction fees the provider charges since this will greatly impact the price you pay.

As these providers are selling physical cash, they don’t have an endless supply and can run out of a particular currency later in the day. If you’re buying a large amount of a particular currency, for example £ 10,000 GBP, it’s best to call the provider a few days in advance to ensure that they will have the cash available for you to purchase. The same applies for currencies that are less commonly purchased.

How do I buy currency online?

If you’re unable to get to a provider’s physical store to buy the currency or if you live in a regional location with no currency exchange providers, purchase the cash online and have it delivered to you. You might find that there are better exchange rates if you purchase online, although you will usually have to pay a delivery or courier fee. Alternatively, order and pay for the currency online and pick it up in-store or at an airport at your convenience.

To buy currency online, head to the provider’s website and create an account with your personal details. You’ll need to select the currency that you wish to buy and the amount that you need to see the price in US dollars. Again, this will be dependent on the exchange rate for that day as well as any transaction fees or commissions charged by the provider.

Once this is set up, and if you’re happy with the price, you will be able to purchase the currency using your credit or debit card. You may be charged an additional fee for credit card payments.

The currency should be available for pickup or it will be delivered to you after a couple of business days. You might be able to opt for same-day delivery if you need the currency urgently. But like anything that’s express-posted, it’ll cost you more.

What ID do I need to provide to purchase foreign currency?

Currency providers will need to confirm your identity before you can buy any currency, meaning you will need to provide a photo ID to purchase cash either online or in store. A valid form of ID should be government-issued, like your driver’s license or passport. Your ID will need to include your photo, your full name, your date of birth, your residential address and the issue and expiry date.

Tips for buying currency

  • Compare providers on the day that you wish to purchase the currency as exchange rates change daily.
  • Call ahead if you’re planning to buy a large amount of cash or a less commonly purchased currency to check that they have the cash available.
  • Consider your own bank for less common currencies, such as the South African rand, since these may not be available at many currency exchange providers.
  • Check what transaction fees and commissions the provider charges, or look for a provider that doesn’t charge any fees.
  • Steer clear of buying cash at the airport, as the exchange rates are often poor and the transaction fees are high.
  • If you’re traveling with over $10,000, you are required by law to declare it.

How do I compare my options?

When comparing your options, the most important factors to look out for are the exchange rates offered, the transaction fees and the commissions charged by the provider.

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If you need to buy currency in the form of cash, there are several options to explore.

Travel Money Type

  • Credit cards
  • Debit cards
  • Prepaid Travel Cards
  • Cash
  • Foreign Currency Exchange
  • Buying Foreign Currency

Compare

  • AAA Visa TravelMoney® Card
  • Travelex

Locations

  • Canada
  • China
  • Europe
  • France
  • Germany
  • Hong Kong
  • India
  • Italy
  • Japan
  • Mexico
  • South Africa
  • South Korea
  • Thailand
  • UK
  • Vietnam
  • A – Z List of countries

Compare More Cards

  • Best credit cards of 2020
  • Best travel cards
  • Best rewards cards
  • Best 0% foreign fee cards

Sign up & start saving!

Get our weekly newsletter for the latest in money news, credit card offers + more ways to save

There are many providers that allow you to buy and sell foreign currency electronically. However, sometimes you need foreign currency in the form of cash. You may simply prefer to have cash for an upcoming holiday, or you may need to make an international purchase with a merchant that only accepts cash.

Whatever the reason, here’s what you need to know about buying foreign currency as cash.

How does buying currency work?

You can buy foreign currency through your local bank, though you may not receive the most competitive exchange rate. Specialist currency exchange providers with storefronts allow you to go in and physically buy cash in the same way that you would make any other purchase. You tell them how much of a particular foreign currency you need and they will tell you how much it will cost you in US dollars.

The price in US dollars will be dependent on the exchange rate offered by the provider, so it is important to shop around to ensure you’re getting the best deal. These exchange rates change daily, so do a comparison on the day that you’re planning to buy the currency. Also check what, if any, transaction fees the provider charges since this will greatly impact the price you pay.

As these providers are selling physical cash, they don’t have an endless supply and can run out of a particular currency later in the day. If you’re buying a large amount of a particular currency, for example £ 10,000 GBP, it’s best to call the provider a few days in advance to ensure that they will have the cash available for you to purchase. The same applies for currencies that are less commonly purchased.

How do I buy currency online?

If you’re unable to get to a provider’s physical store to buy the currency or if you live in a regional location with no currency exchange providers, purchase the cash online and have it delivered to you. You might find that there are better exchange rates if you purchase online, although you will usually have to pay a delivery or courier fee. Alternatively, order and pay for the currency online and pick it up in-store or at an airport at your convenience.

To buy currency online, head to the provider’s website and create an account with your personal details. You’ll need to select the currency that you wish to buy and the amount that you need to see the price in US dollars. Again, this will be dependent on the exchange rate for that day as well as any transaction fees or commissions charged by the provider.

Once this is set up, and if you’re happy with the price, you will be able to purchase the currency using your credit or debit card. You may be charged an additional fee for credit card payments.

The currency should be available for pickup or it will be delivered to you after a couple of business days. You might be able to opt for same-day delivery if you need the currency urgently. But like anything that’s express-posted, it’ll cost you more.

What ID do I need to provide to purchase foreign currency?

Currency providers will need to confirm your identity before you can buy any currency, meaning you will need to provide a photo ID to purchase cash either online or in store. A valid form of ID should be government-issued, like your driver’s license or passport. Your ID will need to include your photo, your full name, your date of birth, your residential address and the issue and expiry date.

Tips for buying currency

  • Compare providers on the day that you wish to purchase the currency as exchange rates change daily.
  • Call ahead if you’re planning to buy a large amount of cash or a less commonly purchased currency to check that they have the cash available.
  • Consider your own bank for less common currencies, such as the South African rand, since these may not be available at many currency exchange providers.
  • Check what transaction fees and commissions the provider charges, or look for a provider that doesn’t charge any fees.
  • Steer clear of buying cash at the airport, as the exchange rates are often poor and the transaction fees are high.
  • If you’re traveling with over $10,000, you are required by law to declare it.

How do I compare my options?

When comparing your options, the most important factors to look out for are the exchange rates offered, the transaction fees and the commissions charged by the provider.

You may be interested in

Sigue international money transfers review

Sigue offers speedy money transfers to 50+ countries, but you have to set up a transfer to see the transaction fees.

How to buy and sell currency

Boss Revolution money transfer review

Join Boss Revolution with an email address and phone number, and send money within minutes.

How to buy and sell currency

How to buy and sell currency

Remittances weakened by a struggling US dollar

Understanding your money sending options can help you send the most money abroad while the dollar struggles.

How to buy and sell currency

Usend review

Usend combines money transfers, bill pay and mobile phone reloading.

How to buy and sell currency

How to buy and sell currency

Paysend review

Paysend offers transfers to more than 70 countries through its app and online service.

How to buy and sell currency

Review: Boxypay international money transfers

Pairing international calls with money transfers makes Boxypay a unique choice.

The bid-ask spread (informally referred to as the buy-sell spread) is the difference between the price a dealer will buy and sell a currency. However, the spread, or the difference, between the bid and ask price for a currency in the retail market can be large, and may also vary significantly from one dealer to the next.

Understanding how exchange rates are calculated is the first step to understanding the impact of wide spreads in the foreign exchange market. In addition, it is always in your best interest to research the best exchange rate.

Key Takeaways

  • The bid-ask spread (or the buy-sell spread) is the difference between the amount a dealer is willing to sell a currency for versus how much they will buy it for.
  • Exchange rates vary by dealer, so it’s important to research the best rate before exchanging any currency.

Bid-Ask Spreads in the Retail Forex Market

The bid price is what the dealer is willing to pay for a currency, while the ask price is the rate at which a dealer will sell the same currency.

For example, Ellen is an American traveler visiting Europe. The cost of purchasing euros at the airport is as follows:

  • EUR 1 = USD 1.30 / USD 1.40

The higher price (USD 1.40) is the cost to buy each euro. Ellen wants to buy EUR 5,000, so she would have to pay the dealer USD 7,000.

Suppose also that the next traveler in line has just returned from her European vacation and wants to sell the euros that she has left over. Katelyn has EUR 5,000 to sell. She can sell the euros at the bid price of USD 1.30 (the lower price) and would receive USD 6,500 in exchange for her euros.

Because of the bid-ask spread, the kiosk dealer is able to make a profit of USD 500 from this transaction (the difference between USD 7,000 and USD 6,500).

When faced with a standard bid and ask price for a currency, the higher price is what you would pay to buy the currency and the lower price is what you would receive if you were to sell the currency.

Direct and Indirect Currency Quotes in Forex Markets

A direct currency quote, also known as a “price quotation,” is one that expresses the price of a unit of foreign currency in terms of the domestic currency. An indirect currency quote, also known as a “volume quotation,” is the opposite of a direct quote. An indirect currency quote expresses the amount of foreign currency per unit of domestic currency.

Most currencies are quoted in direct quote form (for example, USD/JPY, which refers to the amount of Japanese yen per one U.S. dollar). The currency to the left of the slash is called the base currency and the currency to the right of the slash is called, the counter currency, or quoted currency.

Commonwealth Currencies

Commonwealth currencies such as the British pound and Australian dollar, as well as the euro, are generally quoted in indirect form (for example, GBP/USD and EUR/USD, which refer to the amount of US dollars per one British pound and per one euro).

Consider the Canadian dollar. In Canada, this quotation would take the form of USD 1 = CAD 1.0750. This represents a direct quotation, since it expresses the amount of domestic currency (CAD) per unit of the foreign currency (USD). The indirect form would be the reciprocal of the direct quote, or CAD 1 = USD 0.9302.

Next, consider the British pound. In the United Kingdom, this quotation would take the form of GBP 1= USD 1.700. This represents an indirect quotation since it expresses the amount of foreign currency (USD) per unit of domestic currency (GBP). The direct form of this quote would be USD 1 = GBP 0.5882.

Understanding How Currencies are Quoted

When dealing with currency exchange rates, it’s important to have an understanding of how currencies are quoted.

Suppose there is a Canadian resident who is traveling to Europe and needs euros. The exchange rates in the forex market are approximately USD 1 = CAD 1.0750, and EUR 1 = USD 1.3400. That means the approximate EUR/CAD spot rate would be EUR 1 = CAD 1.4405 (1.3400 x 1.0750). A currency dealer in Canada might quote a rate of EUR 1 = CAD 1.4000 / 1.4800, which means that you would pay 1.48 Canadian dollars to buy one euro and would receive 1.40 Canadian dollars if you sold one euro.

The calculation would be different if both currencies were quoted in direct form. If the approximate spot rate for the Japanese yen is USD 1 = JPY 102, this is how you would calculate the price of yen in Canadian dollars:

  • USD 1 = CAD 1.0750 and USD 1 = JPY 102
  • CAD 1.0750 = JPY 102, or CAD 1 = JPY 94.88 (102 / 1.0750)

In general, dealers in most countries will display exchange rates in direct form, or the amount of domestic currency required to buy one unit of a foreign currency.

How to Calculate Cross-Currency Rates

When dealing with cross currencies, first establish whether the two currencies in the transaction are generally quoted in direct form or indirect form. If both currencies are quoted in direct form, the approximate cross-currency rate would be calculated by dividing “Currency A” by “Currency B.”

If one currency is quoted in direct form and the other in indirect form, the approximate cross-currency rate would be “Currency A” multiplied by “Currency B.”

When you calculate a currency rate, you can also establish the spread, or the difference between the bid and ask price for a currency. More importantly, you can determine how large the spread is. If you decide to make the transaction, you can shop around for the best rate.

Exchange Rates Vary by Dealer

Rates can vary between dealers in the same city. Spending a few minutes online comparing the various exchange rates can potentially save you 0.5% or 1%.

Airport kiosks have the worst exchange rates, with extremely wide bid-ask spreads. It’s possible to receive 5% less of the currency you are buying. It may be preferable to carry a small amount of foreign currency for your immediate needs and exchange bigger amounts at banks or dealers in the city.

Some dealers will automatically improve the posted rate for larger amounts, but others may not do so unless you specifically request a rate improvement. If you haven’t had the time to shop around for the best rates, research ahead of time so you have an idea of the spot exchange rate and understand the spread. If the spread is too wide, consider taking your business to another dealer.

The Bottom Line

Wide spreads are the bane of the retail currency exchange market. However, you can mitigate the impact of these wide spreads by researching the best rates, foregoing airport currency kiosks and asking for better rates for larger amounts.

Foreign Currency Ordering—Convenient and Secure

How to buy and sell currency

How to buy and sell currency

How to buy and sell currency

How to buy and sell currency

How to buy and sell currency

We provide all-in pricing for exchange rates. The price provided may include profit, fees, costs, charges or other mark ups as determined by us in our sole discretion. The level of the fee or markup may differ for each customer and may differ for the same customer depending on the method or venue used for transaction execution.

In connection with our market making and other activities, we may engage in hedging, including pre-hedging, to mitigate our risk, facilitate customer transactions and hedge any associated exposure. Such activities may include trading ahead of order execution. These transactions will be designed to be reasonable in relation to the risks associated with the potential transaction with you. These transactions may affect the price of the underlying currency, and consequently, your cost or proceeds. You acknowledge that we bear no liability for these potential price movements. When our pre-hedging and hedging activity is completed at prices that are superior to the agreed upon execution price or benchmark, we will keep the positive difference as a profit in connection with the transactions. You will have no interest in any profits.

We also may take proprietary positions in certain currencies. You should assume we have an economic incentive to be a counterparty to any transaction with you. Again, you have no interest in any profit associated with this activity and those profits are solely for our account.

You acknowledge that the parties to these exchange rate transactions engaged in arm’s-length negotiations. You are a customer and these transactions do not establish a principal/agent relationship or any other relationship that may create a heightened duty for us.

We do not accept any liability for our exchange rates. Any and all liability for our exchange rates is disclaimed, including without limitation direct, indirect or consequential loss, and any liability if our exchange rates are different from rates offered or reported by third parties, or offered by us at a different time, at a different location, for a different transaction amount, or involving a different payment media (including but not limited to bank-notes, checks, wire transfers, etc.).

Order by 2 p.m. (delivery address local time) and your currency will ship the same business day. See shipping & fee details layer

Order foreign currency

We provide all-in pricing for exchange rates. The price provided may include profit, fees, costs, charges or other mark ups as determined by us in our sole discretion. The level of the fee or markup may differ for each customer and may differ for the same customer depending on the method or venue used for transaction execution.

In connection with our market making and other activities, we may engage in hedging, including pre-hedging, to mitigate our risk, facilitate customer transactions and hedge any associated exposure. Such activities may include trading ahead of order execution. These transactions will be designed to be reasonable in relation to the risks associated with the potential transaction with you. These transactions may affect the price of the underlying currency, and consequently, your cost or proceeds. You acknowledge that we bear no liability for these potential price movements. When our pre-hedging and hedging activity is completed at prices that are superior to the agreed upon execution price or benchmark, we will keep the positive difference as a profit in connection with the transactions. You will have no interest in any profits.

We also may take proprietary positions in certain currencies. You should assume we have an economic incentive to be a counterparty to any transaction with you. Again, you have no interest in any profit associated with this activity and those profits are solely for our account.

You acknowledge that the parties to these exchange rate transactions engaged in arm’s-length negotiations. You are a customer and these transactions do not establish a principal/agent relationship or any other relationship that may create a heightened duty for us.

We do not accept any liability for our exchange rates. Any and all liability for our exchange rates is disclaimed, including without limitation direct, indirect or consequential loss, and any liability if our exchange rates are different from rates offered or reported by third parties, or offered by us at a different time, at a different location, for a different transaction amount, or involving a different payment media (including but not limited to bank-notes, checks, wire transfers, etc.).

Many crypto newcomers aren’t sure where to begin when it comes to getting started in the world of buying and selling. That’s why we’ve created this easy step-by-step guide.

Step 1: Understand the basics

The first stop for anyone new to crypto is learning about the fundamentals of cryptocurrency. Check out this article for a helpful introduction.

Once you’re clear on how it works and what cryptocurrencies are available, you can move onto the next step: opening a wallet that lets you buy, hold and sell crypto.

Step 2: Set up a Skrill wallet

Next: set yourself up with a crypto wallet so you can make your first purchase when the time is right.

Skrill lets you instantly convert 40 currencies including Euros, US Dollars and British Pounds into crypto. With more than 10 cryptocurrencies available including Bitcoin, it’s a great way to build your portfolio quickly, easily and securely.

Step 3: Learn more about crypto

Develop a solid knowledge of the wider crypto market. There are various online resources you can visit to learn more about key approaches and we have several articles to help.

For example, you can learn more about dollar-cost averaging (buying the same value of crypto on the same day every month, regardless of its value) or look into the histories of some of the major cryptocurrencies to understand more about them. You can also check out how crypto relates to the broader stock market.

How to buy and sell currency

How to buy and sell currency

Step 4: Decide which cryptocurrencies you will buy

You should feel confident enough to pick a final digital currency or currencies that you’d like to focus on. Now is a great time to do some specific research on those cryptocurrencies, making sure to look at price graphs, news, key events (such as Bitcoin’s halvening) and key metrics.

Step 5: Get started

Now you’re ready to make your first crypto purchase. When you’re starting out, remember to take one step at a time and you’ll be confident with how to buy and sell.

Related articles

How to buy and sell currency

How to buy and sell currency

How to buy and sell currency

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If you are an aspiring currency trader, then your success will depend upon how well you buy and sell forex pairs. Whether attempting to “buy low and sell high” or “sell high and buy low” engaging the market with maximum efficiency is the key to achieving long-term success. In this entry, we will cover a few fundamental forex buy and sell tips , along with actual strategies for buying and selling currency products.

How to buy and sell currency

Which Currencies Can You Buy, Sell, and Trade On The Forex?

Perhaps one of the most significant benefits of forex trading is the multitude of options available to market participants. Currencies from every corner of the globe are readily tradable, each with a unique collection of opportunities and risks. Make no mistake, when it comes to buying and selling currency , the forex is the world’s premier destination.

The currencies available to buy, sell, and trade on the forex are grouped according to three primary classifications:

  • Majors: The majors are the eight largest and most frequently traded currencies in the world. These include the U.S. dollar (USD), euro (EUR), British pound sterling (GBP), Swiss franc (CHF), Canadian dollar (CAD), Japanese yen (JPY), Australian dollar (AUD), and New Zealand dollar (NZD).
  • Minors: Minor currencies are those that are bought and sold less frequently than the majors. According to the Bank of International Settlements (BIS) Triennial Survey 2019, examples of minors include the Hong Kong dollar (HKD), Norwegian krone (NOK), South Korean won (KRW), and Swedish krona (SEK).
  • Exotics: Exotic currencies are sparsely traded and offer greater volatility than the majors and minors. Typically, exotics are monies local to developing nations and are less stable than those of more established economies. The BIS Triennial Survey 2019 suggests that the Malaysian Ringgit (MYR), South African rand (ZAR), and Romanian Leu (RON) may be classified as exotic currencies.

On the forex, currencies are traded in tandem with one another, or “paired.” Subsequently, currency pairings furnish market participants with a convenient way to directly capitalize on international exchange rate variations . One is able to quickly buy and sell forex pairs as deemed fit, according to any strategy. Below are a few of the most popular forex currency pairs:

  • Majors: The majors feature the largest traded volumes on the forex and are paired with the world’s reserve currency the USD. The major pairs are the EUR/USD, GBP/USD, USD/CHF, USD/CAD, USD/JPY, AUD/USD, and the NZD/USD.
  • Minors: Minor pairs are those that do not include the USD. Some of the most popular are the EUR/GBP, EUR/AUD, CHF/JPY, and GBP/CAD. Minor pairs are often referred to as “crosses,” as the USD is absent from the exchange.
  • Exotics: Exotics are less commonly traded, featuring comprehensive bid/ask spreads and enhanced volatility. Examples include the USD/HKD, JPY/NOK, and GBP/ZAR.

One of the great things about forex is the actual size of the marketplace. With more than $6 trillion in average daily turnover (2019), there are always opportunities to profit from buying and selling currency pairs. Through a little due diligence, it’s possible to focus on the currency or currencies best-suited to your personal goals.

Factors That Impact Currency Pairs

At the top of any list of forex buy and sell tips is choosing an ideal currency or pairing to trade. Of course, finding the best pair will depend upon your resources, expertise, and strategic objectives. Optimal forex pairs exhibit the following characteristics:

  • Liquidity: The best currency pairs are consistently liquid. Robust participation facilitates tight bid/ask spreads, reduced slippage, and overall trade-related efficiency. These are key factors to be aware of before you buy and sell forex pairs.
  • Volatility:Exchange rate volatility measures the magnitude of pricing fluctuations displayed by a currency pair. Volatility enhances both risk and reward, as extreme swings in pricing can produce extraordinary gains and losses. While volatility is viewed by many traders as being a negative, exchange rate fluctuations are needed to profit from buying and selling currency pairs.

If you are going to make money through buying and selling currency pairings on the forex, it’s best to focus on those that are liquid and active. These products offer tight bid/ask spreads, optimal market depth and an abundance of money-making opportunities.

How to buy and sell currency

When To Buy And Sell Currencies On The Forex

If you have any experience in the business world, then you already know that timing is everything. Forex trading is no different ― one must buy, sell, and trade forex pairs at the right time to sustain profitability.

So, how can one decide when to buy and sell forex pairs? That answer is complex and will vary depending upon your trading strategy. Nonetheless, there are various tried-and-true methods of timing the market properly. Below are the three primary types of trading and a few forex buy and sell tips :

  • Trend: Trend traders buy and sell forex pairs in concert with a directional move in exchange rates. To accomplish this task, traders use tools such as Fibonacci retracements , moving averages, and momentum oscillators to decide when to join a prevailing trend. If the indicators are deemed valid, the trader buys to enter a bullish trend and sells to enter a bearish trend.
  • Reversal: In contrast to trend following strategies, reversals involve identifying a market’s periodic top or bottom. To identify a potential market entry point, technical indicators are frequently used to buy, sell and trade reversals. A few examples are Stochastics , candlestick patterns , and moving average crossovers. Upon a currency pair becoming “overbought” or “oversold,” a reversal trade is then executed. This is done through buying against a bearish trend and selling against a bullish one. Although many forex buy and sell tips to promote reversal strategies, it’s important to remember that they can be tricky to execute and are at higher risk.
  • Range: A range-bound market is one that is trading within an established periodic upper and lower extremity. These types of markets are often considered to be boring due to the lack of a prevailing trend. However, many traders prosper through focussing on range-bound markets. One common way is through implementing reversion-to-the-mean strategies. When adhering to a reversion-to-the-mean methodology, buying and selling currency pairs is done contrary to an established top or bottom. If successful, selling near a market’s top or buying near the bottom will be profitable as price rejects the extreme and revisits an average level.

Ultimately, each of the above strategy types can be effective ways of determining when to buy and sell forex pairs. Given a consistent application and disciplined approach, it’s possible to realize steady gains from trading trends, reversals, and range bound markets.