The Forex market is full of different holdings one can trade, and some of these possible investments aren't even currencies. There are numerous possible currency pairs, but only a few trade at a high enough volume to be considered major. You can trade Thai Baht, but it will probably never have nearly as much volume as British Pounds. Let's look at the most major assets on the FX market.
The seven most widely traded currencies on the Forex market are:
- US dollar or USD
- Canadian dollar or CAD
- Swiss Franc or CHF
- Euro or EUR
- Japanese yen or JPY
- British pound or GBP
- Australian dollar or AUD
Commodities, in this case, can refer to both commodity-heavy nations and actual commodities traded for currencies. Some of the most major commodity-related currency pairs are the USD/CAD, USD/AUD and USD/NZD. NZD stands for New Zealand dollar. Although the NZD isn't traded enough to stand among the top currencies, it is traded highly enough to be a serious player among countries with a lot of natural resources.
Some commodity futures that are traded against currencies are gold, silver and crude oil. Since these are the most vital resources for most of the world's economies, trading them effectively is a high priority. These can be paired with most of the heavily traded currencies, but they are most commonly paired against the US dollar.
A Forex index is an indicator of how strong a currency is relative to other currencies. Since Forex trading is just matching one currency against another, it's traditionally hard to evaluate how strong a currency is against the rest of the market. Using an index, a currency is compared against a basket of other currencies.
The most major indices are based on the most widely traded currencies listed above, and they are primarily compared against each other. One major exception to this is the US dollar index, which is compared against the Euro, Yen, Pound Sterling, Canadian Dollar, Swedish Krona and Franc.
You have an immense number of different investment opportunities in the Forex and futures markets. In addition to trading currencies against one another, you can also trade commodities and even indices where one currency is compared against several others. These options allow you to trade in a multitude of different ways based on more complex strategies that more effectively take into account the larger global picture.
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