The foreign exchange market is the world's largest 澳洲幸运5官方开奖结果体彩网:financial market, accounting for more than $7.5 trillion in turnover each day. This market is comprised of banks, commercial companies, 澳洲幸运5官方开奖结果体彩网:central banks, investment firms, 澳洲幸运5官方开奖结果体彩网:hedge funds, and 澳洲幸运5官方开奖结果体彩网:retail investors. Participants can buy, sell, exchange, and speculate on currencies. Interested in diving in but unsure how? This article highlights some of the key ways to invest in the foreign exchang🌳e market.

Foreign Exchange

The 澳洲幸运5官方开奖结果体彩网:forex market is a 24-hour cash (spot) market where currency pairs are traded. Because currencies are traded in pairs, investors and traders bet one currency will go up and the other will go down. The currencies are bought and sold according to the 澳洲幸运5官方开奖结果体彩网:current price or 澳洲幸运5官方开奖结果体彩网:exchange rate.

The world's most traded currency pair is the 澳洲幸运5官方开奖结果体彩网:euro versu💧s the U.S. dollar (EUR/USD). Daily trade volume in this currency pair made up 24% in 2019.

Other popular currency pairs include:

• JPY/USD
• GBP/USD
• AUD/USD
• CAD/USD
  

Foreign Currency Futures

Foreign 澳洲幸运5官方开奖结果体彩网:currency futures are 澳洲幸运5官方开奖结果体彩网:futures contracts on currencies. These are exchange-traded financial derivatives that are bought and sold based on a standard size and 澳洲幸运5官方开奖结果体彩网:settlement date. Contracts specify the price in one currency at which another currency can be bought or sold at a future date. Currency futures are comꦦmonly used to hedge currency risks or traders may use them to speculate on movements ܫin currency prices.

The 澳洲幸运5官方开奖结果体彩网:Chicago Mercantile Exchange (CME) Group is the largest foreign currency futures market in the U.S. It offers futures contracts on G10 as well as 澳洲幸运5官方开奖结果体彩网:emerging market currency pairs and e-micro products.

Foreign Currency Options

While futures contracts represent an obligation to either buy or sell a currency at a future date, foreign currency options give the option holder the right (but not the obligation) to buy or sell a fixed amount of💧 a foreign currency at a specified price on or before a specified future date.

Investors can trade foreign currency 澳洲幸运5官方开奖结果体彩网:call and put options:

• Traders buy FX call options when they believe the 澳洲幸运5官方开奖结果体彩网:base currency will get stronger compared to the quote currency. They sell FX call options when they believe the quote currency will rise against the base currency.
• Traders buy FX put options when they think the 澳洲幸运5官方开奖结果体彩网:quote currency will rise against the base currency. They sell FX put options when they think the base currency will rise against the quote currency.

Exchange-Traded Funds (E🐓TFs) and Exchange-Traded๊ Notes (ETNs)

澳洲幸运5官方开奖结果体彩网:Exchange-traded funds (ETFs) and 澳洲幸运5官方开奖结果体彩网:exchange-traded notes (ETNs) are designed to mirror the returns of an index or other benchmark. Both ETFs and ETNs trade on stock exchanges like stocks. The key difference between the two is that, unlike an ETF, an ETN doesn't own the underlying asset. Rather, it is an 澳洲幸运5官方开奖结果体彩网:unsecured debt note issued by a bank or financial institution.

Forex ETFs🦄 and ETNs provide exposure to foreign exchange markets. Some ETFs🌺 are single-currency, while others buy and manage a group of currencies.

Certificates of Deposit (CDs)

Foreign currency 澳洲幸运5官方开奖结果体彩网:certificates of deposit (CDs) are available on individual currenciesꩵ or baskets of currencies and allow investors to earn interest at foreign rates. For example, EverBank offers a range of currency-related CD options, including:꧟

• New World Energy CD Basket, which provides exposure to the Australian dollar (AUD), 澳洲幸运5官方开奖结果体彩网:Canadian dollar (CAD), and 澳洲幸运5官方开奖结果体彩网:Norwegian krone (NOK)
• Global High Yield, which provides exposure to the Brazilian real (BRL), 澳洲幸运5官方开奖结果体彩网:Indian rupee (INR), Mexican peso (MXN), and 澳洲幸运5官方开奖结果体彩网:South African rand (ZAR)
• Viking, which offers investors exposure to the 澳洲幸运5官方开奖结果体彩网:Danish krone (DKK), Norwegian krone (NOK), and 澳洲幸运5官方开奖结果体彩网:Swedish krone (SEK)

Foreign Bond Funds

Foreign 澳洲幸运5官方开奖结果体彩网:bond funds are mutual funds that invest in the bonds of foreign governments. 澳洲幸运5官方开奖结果体彩网:Foreign bonds are typically denominated in the currency of th🎀e country of sale. If the value of the foreign currency rises relative to the investor's local currency, the earned interest will increase when🐈 it is converted. 

The Bottom Line

There are multiple options available for anyone who wants to trade currencies. You can take advantage of currency exchange rates by investing in any of the options highlighted above. But, trading currencies can be as risky a venture as it can be profitable. You have to have some level of experience and discipline before you dive in. That's why it's important to take the time to understand how the market works and to practice trading to mitigate your losses.

Investopedia does not provide tax, investment, or financial services and advice. The information is presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Investing involves risk, including the possible loss of principal.