Forex Currency Exchange Beyond the US Dollar

The US dollar is often seen as the equilibrium of world economic transactions, as much of the stock market investing world revolves around it. This is no different in forex currency exchange trading as well.

Forex Currency Exchange Beyond the US Dollar

 

The US dollar is often seen as the equilibrium of world economic transactions, as much of the stock market investing world revolves around it. This is no different in forex currency exchange trading as well. This does not always have to be the case, though, when investing in forex and using world currency value to turn a profit. There are many other options as the US dollar only accounts for a few of the trading opportunities out there. 

 

There are seven major currency pairs in the forex currency exchange market. These currencies are all trading with the US dollar to establish these major pairs: the British pound (GBP), euro (EUR), Swiss franc (CNF), Japanese yen (JPY), Australian dollar (AUD), Canadian dollar (CAD), and the New Zealand dollar (NZD). However, even though these are the major currency pairs, it is very possible to trade these currencies with each other as well and not just with the US dollar.

 

In total, there are 24 different currency pairing options available with only nine containing the US dollar and some other currency. The other two currencies not listed as a major pair are the Norwegian krone (NOK) and the Swedish krona (SEK). With the US dollar being traded on less than half of the possible trades, it can be more beneficial to make investments that include the US dollar in addition to ones that do not.

 

Why Step Away from USD?

 

Another strategic reason to not continuously trade the US dollar against other currencies is its stability in the world financial industry. That might sound a little backwards, but the nature of forex is the reliance on fluctuation of currencies to turn a profit and that cannot be done with a currency who constantly produces steady numbers. This is especially true for more than one stable currency paired with each other, which is in most cases the result of US dollar pairs.

Cryptocurrency like bitcoin (BTC) paired with a tangible currency is an alternative and is also traded on a limited basis. BTC forex trading is currently done against the euro, which sees a lot of fluctuation. Because the exchange rate of BTC is very high, there is a lot of room to work with to make a profit on this type of investment.

 

Broaden Your Trading Horizons

 

Trading forex can be a very worthwhile endeavor for any investor wishing to make a mark in the financial world. Broadening your investment plan to include other currencies is the best way to better your chances of making money. The US dollar is the most highly traded currency in forex, but the amount of times a currency is traded has no bearing on the value of that currency compared to another. It is all about fluctuation of value, and that is seen a lot more in pairs not containing the US dollar. Either way, you must find what works best for your personal trading plan to make you successful in the world of forex.

 

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing you money.