Currency Trading

It’s a well known fact that currency rates go up and down every day. What most people don’t realise is that there is a foreign exchange market where you can potentially profit from the movement of these currencies. So let’s understand currency trading and why the value of currencies fluctuate.

Currency Trading in Binary Options

The foreign exchange market is the largest financial market on Earth with a trading volume that can average more than $3 trillion per day. That’s a lot of money changing hands and trading currencies with binary options is becoming increasingly popular. There are many reasons for this.

For instance, binary options offer quick gratification. As compared to the other trading avenues, with binary options, you can trade currencies in intervals of minutes and hours. The advancements in Internet technology have also made the foreign exchange market a lot more accessible to people. The trick is to understand how currency trading works.

For example, foreign exchange is a 24-hour market but it’s divided into the European, Asian and U.S. trading sessions. Although there is some overlap in the sessions, the main currencies in each market are traded mostly during specific market hours. Additionally, currencies are always traded in pairs.

To understand how you can trade currencies using binary options, consider the EUR/USD Currency Pair. If a trader thinks the Euro will strengthen relative to the U.S. Dollar, he or she places a “Call” option believing that the pair will rise. Conversely, if the trader thinks the Euro will weaken relative to the U.S. Dollar, he or she places a “Put” option.

The currency on the left (the Euro here) is known as “the base”. The currency on the right (the USD here) is known as “the counter”.

Why Trade Currencies

Accessibility

You can start trading currencies with a relatively small amount of capital. For instance, the minimum investment amount for trading currencies with our 60 seconds trading tool is $5.

Profit Potential

Profit potential is what every investor wants to hear about and trading currencies with binary options has plenty of it.Using our Ladder trading tool, traders can earn payouts of up to 1000% with the right speculations.

Easy Analysis

With foreign exchange, traders can use a variety of tools and techniques to develop a winning strategy. This includes the analysis of currency charts and following the effect of economic, social and political events on currency prices.

24-Hour Trading

Foreign exchange is a 24-hour market that is only closed from Friday evening to Sunday evening.

Easy & Convenient

The majority of the volume in currency trading is confined to only 18 currency pairs compared to the thousands of stocks that are available across global markets. Having less options makes trading and portfolio management an easier task.

Factors That Influence Currencies

Employment

Events like the United States Non Farm Payrolls measure monthly changes relating to employment figures of a given population. An increase in unemployment signals a slowdown in the economy and possible devaluation of the country’s currency because of declining confidence and lower demand.

The U.S. NFP is one of the most anticipated employment reports because it is a reliable indicator of employment in the U.S. It is issued on the first Friday of every month and it’s not something you want to miss.

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EU Minimum Bid Rate

The minimum bid rate issued by the European Central Bank is considered by traders to have a major impact on the financial markets. In particular, Euro currency pairs are affected because this event relates to the interest charged by the ECB for loans it gives to banks across Europe.

For example, when an economy is overheating, central banks may raise interest rates to make borrowing more expensive. This increases the yields for assets denominated in the currency, which increases demand by investors and causes an increase in the value of the currency.

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Trade Balance Report

Around the 19th of every month, the Bureau of Economic Analysis releases the Trade Balance Report. This report relates to the imports and exports of the United States and is a good indicators of the health of the U.S. economy and its relationship with the rest of the world.

In general, when exports are greater than imports, this is a good sign for a country’s economy and could translate into an increased value of its currency. This is because trade balance impacts the supply and demand for a currency. When a country has a trade surplus, demand for its currency increases as foreign buyers exchange more of their home currency to buy goods.

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