Understanding Currency Pairs

Currencies in Pairs
New traders often struggle to grasp the concept of trading currencies in pairs. "Why not just buy the Euro?" they might ask. "Why does it have to be paired with the US Dollar?" The currency on the right side of the pair is there to establish a comparative value, without it we would be unable to assign a value to the base currency (currency on the left side of the pair). If the currencies were not paired, we would be unable to determine what a single currency would gain or lose value against. By pairing two currencies against each other a fluctuating value can be established for the one versus the other.
Cross Currency Pairs
Currency pairs that do not include the US dollar are commonly referred to as Cross Currency Pairs. Cross Currency trading can open a completely new aspect of the Forex market to speculators. Some cross currencies move very slowly and trend very well. Other cross currency pairs move very quickly and are extremely volatile; with daily average movements exceeding 100 pips.
Many of these cross currencies have a higher swap value. Swap is a credit or debit as a result of daily interest rates. When traders hold positions over night, they are either credited or debited interest based on the rates at the time. Often, cross currencies yield higher interest rates than major currencies.

Forex vs Stocks

Forex inherently appeals to traders world-wide with its advantages.

24-Hour Trading

One of the foremost advantages of trading Forex is 24-hour trading. Forex is able to trade 24 hours because it isn't traded on an exchange; rather by banks around the globe. Even though it may be 9:00 pm on a Wednesday, there is a market open somewhere in the world in which currency is available for trading. Forex is a true 24-hour market, trading from Sunday afternoon ET to Friday afternoon ET. Such 24-hour trading allows investors to trade on their own schedule - and not on the schedule of an exchange.

Fewer Fees

With IBFX Australia, the only transaction cost to trade Forex is the spread - the difference between the bid and ask prices. On top of that, we have low spreads on the majors.

Enjoy low spreads with IBFX Australia

But don't take our word for it: here on our website we publish actual previous spreads to substantiate our low spreads claim. Say goodbye to commissions, account maintenance fees and service fees, inactivity fees, account closing fees, and say hello to the simple power of trading Forex with IBFX Australia.

Fewer Short Selling Restrictions

With the same margin requirements as buying long, a trader can sell short in the Forex market without added costs and hassle. This allows traders to act on a bullish market as well as a bearish one.