Currency Trading For Dummies®

The lion’s share of forex market turnover comes from speculators. Market estimates suggest that upwards of 90 percent of daily FX trading volume is based solely on speculation.

Because of the overlap between North American and European trading sessions, the trading volumes are much more significant. Some of the biggest and most meaningful directional price movements take place during this crossover period. On its own, however, the North American trading session accounts for roughly the same share of global trading volume

The forex markets have had a limited form of electronic trading since the mid-1980s. At that time, the primary means of electronic trading relied on an advanced communication system developed by Reuters, known as Reuters Dealing. It was a closed-network, real-time chat system well before the Internet ever hit the scene. The Reuters system enabled b

When the market outlook for the U.S. dollar is uncertain or mixed against other major currencies, the U.S. dollar index can frequently provide a clearer picture. If the U.S. dollar index breaks key technical levels, many currency traders react in the major spot currency pairs, building on the break of the U.S. dollar index. The flows can go either

Liquidity refers to the level of market interest — the level of buying and selling volume — available at any given moment for a particular asset or security. The higher the liquidity, or the deeper the market, the faster and easier it is to buy or sell a security.

There are several daily currency fixings in various financial centers, but the two most important are the 8:55 a.m. Tokyo time and the 4 p.m. London time fixings. A currency fixing is a set time each day when the prices of currencies for commercial transactions are set, or fixed.

The exact weightings of other currencies in the U.S. dollar index are * Euro: 57.6 percent * Japanese yen: 13.6 percent * British pound: 11.9 percent * Canadian dollar: 9.1 percent * Swedish krona: 4.2 percent * Swiss franc: 3.6 percent

The U.S. dollar index is great parallel universe to the spot U.S. dollar currency pairs. As a currency trader, be sure to follow the U.S. dollar index, especially its technical developments.

At its heart, currency trading is about speculating on the value of one currency versus another.