How does currency trading work?

When you are buying currency pairs, you are buying a currency while selling another. We start with a simple example to describe how currency trading works: USD / AUD is one of the most commonly traded currency pairs in Australia. USD is the US dollar denomination and AUD is the Australian dollar denomination. In this currency pair, the USD is referred to as the base currency and AUD is referred to as the counter currency. In this example, it means that you believe that the US dollar will be strengthened against the Australian dollar.

The correlation is nevertheless seen as a single unit even though it refers to two separate currencies. In other words, you trade the USD / AUD pair and not the USD or AUD.

We take one clear example to further clarify this by adding some numbers. Assuming USD / AUD is trading at 1.39300988, it means that every $ 1 = 1.39 AUD. In other words, the US dollar is stronger than the Australian dollar, or vice versa, you need more AUD to buy USD.

Currency trading opening hours

One of the major benefits of currency trading is its high availability. If you invest on the Australia Securities Exchange then you probably already know that it is open from 10 am to 4 pm on weekdays and closed on Saturdays and Sundays. Trading in currencies, on the other hand, is in principle always open, or at least during everyday life.

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