Why the US dollar is used in maximum forex transactions?
- Written by News Feature Team
Traders who are trading in the market use many different types of currency pairs in Forex. There are major currency pairs and minor currency pairs in the market. Most of the time, it is found that traders are trading the market with major currency pairs. It is because that major currency pairs are used in almost every market in Forex and they are also easy to trade. In Forex transaction, US dollar is the major currency. It is not that there are no other currencies in the market. There are much different major currency pairs in the market and US dollar makes more than 80% of the Forex transaction. Even if you live in Australia, you can deposit in U.S dollar in the reputed broker. To be precise all brokers have the options to trade with mighty green bucks.
US dollar is the world’s strongest currency
The reason US dollar is the major currency pair in forex trading is that it is the strongest currency of the world. In any part of the world, whether it is Asia or in America, the dollar is accepted. It is a universal form of money which every people from all other countries can understand. In tourist and travel spots of all the countries, they widely accept the dollar as a form of money. It has also the most liquidity in currency pairs. You can exchange dollars into your own currency at any time.
Also, there are many countries that prefer dollars when exporting their products. China, one of the economic superpower of the world, always use dollar when exporting their products. In the second quarter of 2016, most of the reserve of the world was on the dollar and it was 63.4%.
Dollar is the global currency
Thanks to the Bretton Woods Agreement in 1944, when all the countries agree to convert their currencies into gold and the wealth of the countries were measured by a reserve of the gold. This agreement has a tremendous contribution which makes the Dollar as the global currency of the world. In forex, when traders are trading the market, their first choice is always in dollars. As the dollar is the strongest currency of the world, it is also not affected by the economic events and news. It is relatively more stable than the other currency pairs of the worlds. Meanwhile, here are the most volatile forex pairs.
Becoming a profitable trader
No matter which currency you used to fund your trading capital you need to find the perfect trade setups in your trading platform to execute high-quality trades in the market. Most of the novice traders lose money since they execute random trades. But if you look at the professional traders at Saxo then you will notice all of them do the perfect technical and fundamental analysis before they place any trades on the market. If you are relatively new then it will be a little bit difficult for you to spot the best trades. As a new trader, you should learn the market basics first before you start trading with the live assets. Though there are many different kinds of trading strategy in the financial market yet price action trading strategy is considered to be the most reliable one. Learn the most reliable candlestick pattern and trade the key support and resistance level with price action confirmation signal. But always remember that you will have losing orders in the market. So place your trade with proper risk management factors to survive in the long run.
Conclusion: Dollar is the global currency of the world. Every country use dollars for their transactions of goods and services and traders also use dollars for trading in forex market. It is the most widely used currency pair in the market. And for this very reason, every single broker has given the traders to trade with mighty green bucks.