Description
The concept of a currency arises from the need to facilitate transactions and exchange of goods and services. Currently, for most cases, a central bank (ie. the Federal Reserve or the European Central Bank) has the monopoly to issue the currency for the country (e.g. Federal Reserve for the United States) or for a monetary union (e.g. European Central Bank for the European Monetary Union).
The currency market is the world's largest market with a traded volume exceeding 3.2 trillion dollars, surpassing the combined volume of Corporate Shares and Bonds. The currency market is by far the most liquid and efficient market in the world.
A currency is defined by three letters (USD, EUR, JPY, etc). Usually, the first two letters correspond to the country and the third the name of the currency: U.S. dollar, or JP (Japan) Yen.
Negotiation of Currencies is done by the use of a cross, a combination of two currencies (currency pairs: cross). In the cross, the left pair is the currency negotiated (1 unit) and the right pair is the currency's price. For example EURUSD at 1.4112 means that 1 Euro (EUR) is priced at 1.4112 Dollars (USD).
