Investing in Forex

Forex

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Investing in Foreign Currency

As it is known, forex market allows online investments and offers a lot of investment product options.

Investment products on forex markets are primarily foreign exchange rates, commodities and stock exchange indices. Foreign exchange rates are available as foreign currency pairs which are called parities.

Parity is the exchange value between two different currencies. For instance, trading TRY for USD in a currency exchange has the same meaning as opening a long position on the USDTRY parity.

All foreign exchange rates are available as pairs, and you can trade by opening long or short position for the foreign currency you plan to buy at the relevant parity. This allows a trader to trade faster with more options without visiting a currency exchange at all. There are two types of parities on the forex market: major and exotic.

For instance, USD/TRY and EUR/TRY are minor parities that are usually preferred by Turkish traders. They have a lower transaction volume compared to major parities, therefore exotic parities have wider spreads. There are six major parities.

They are; “ EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD”

Currencies other than those 6 major currencies are called exotic minor currencies. Exotic parities are usually preferred by local traders. Trading on the forex market with parities is both faster and less costly than physical trading. In this sense, parities are frequently used as an investment product by forex investors worldwide.

Currencies of the Major Parities represent active and developed economies. Moreover, international traders usually trade on major parities, effectively increasing their transaction volumes.


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