Unioption Forex hits the global market

FOReign EXchange refers to the global market where national currencies are traded virtually around the clock. The largest trading centers are London, New York, Singapore and Tokyo.

The most-traded Forex currency pairs are:

• EUR/USD. 
• GBP/USD. 
• USD/JPY. 
• AUD/USD. 
• USD/CHF. 
• EUR/GBP. 
• USD/CAD. 
• EUR/JPY.

Since there is constant fluctuation between the currency values of countries due to varying supply and demand factors such as interest rates, trade flows, tourism, economic strength and geopolitical risk, an opportunity exists to bet against these changing values by buying or selling one currency against another in the hopes that the currency you buy will gain in strength or that the currency you sell will weaken against its counterpart.

Besides trading for a profit or yield, currency trading can be used to hedge a stock portfolio. For example, if someone builds a stock portfolio in a country where there is potential for the stock to increase in value, but there is downside risk in terms of the currency (i.e., the U.S. in recent history), a trader could own the stock portfolio and short the dollar against another currency such as the Swiss franc or euro. In this way, the portfolio value will increase, and the negative effect of the declining dollar will be offset. This is true for those investors outside the U.S. who will eventually repatriate profits back to their own currencies.

Overall, Forex leads to some of the highest profit gains, but is also extremely risky.