The term ‘currency’ refers to any form of money in circulation. The process of buying and selling currencies of different countries is called currency trading. For example, you are a US citizen and want to make a trip to Germany. So you need Euros in order to buy things and services, i.e. the currency of the destination place. That is why you go to a bank and process an exchange operation where the bank functions as a currency broker, the transaction being part of the currency markets. Let us take another example. Commercial organizations from the European Union want to purchase some goods from the United States, so they need US dollars to pay for them. This situation raises the demand for US dollars over a short period of time causing the value of the dollar versus Euro to increase. People and organizations involved in currency trading (individual day traders, trading companies, financial and non-financial entities, banks and etc.) have an excellent opportunity to make profits by selling US dollars at increased prices.
Such operations are most commonly conducted at currency markets. The largest currency market is the foreign exchange market (FX, Forex) which is a decentralized, continuously operating, geographically dispersed market for trading currencies.
The major currency markets are:
§ EUR -> USD – The Euro to US Dollar exchange rate
§ GBP -> USD – The British Pound (Sterling) to US Dollar exchange rate
§ EUR -> GBP – The Euro to British Pound exchange rate
§ CAD -> USD – The Canadian Dollar to US Dollar exchange rate
§ AUD -> USD – The Australian Dollar to US Dollar exchange rate
§ EUR -> CHF – The Euro to Swiss Franc exchange rate
Trading currencies includes taking great risks, since the factors affecting currency rates are numerous and hard to predict. However, a lot of individuals find it an exciting and quick way of earning large sums of money. Many strategies including conservative risk management, using future markets combination of fundamental and technical analysis, use of the pyramiding method of building up a position in a currency pair have been developed throughout the years by currency brokers to avoid risks of currency trading and gaining large revenues. There are Forex courses and programs worldwide which help people improve business and financial skills.
However, to earn a sufficient sum of money you have to have one at your disposal in the first place.