What Is a Currency Market?

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A currency market looks at whether currency in a country will gain or loose value based on the strength of different country economy. Use information on currency markets to make money with tips from a financial consultant in this free video on currency trading and investing.

Part of the Video Series: Currency Trading Guide
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Video Transcript

Welcome to currency trading. My name is Roger Groh. Over the next few minutes we're going to talk about currency, how you buy it, how you sell it, the best way to do that and how you can make money. First up, what is currency trading? Well countries are much like homes, they have to have cash available to settle in different markets around the world. So for instance, if the US if a company in the United States, let's say Microsoft sells a piece of software to Japan it has to be shipped there and that ultimately is going to be settled in Yen. So the United States needs Yen on hand in order to settle that transaction. Microsoft pays the bank, the bank goes to the government, the government goes to Yen and the government then pays the government of Japan, the government of Japan then pays the end buyer. That's the way that all works. You need 3 to 6 months worth of currency on hand if you're a country to settle your accounts. So countries are much like homes, they have currencies of all types on hand in their central banks to settle. However, we all know that prices of currencies go up and down substantially and no bank or individual likes to lose money. So a business has developed around betting on whether a currency's going to weaken or strengthen. And that's really what currency trading is all about. How to use that data in order to make money. That's what we're going to talk about.

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