What is meant by currency trading, is the process of buying and selling different currencies in the foreign exchange market, or known as forex, which is a source of foreign currencies, for the purpose of making profits. This market is the most liquid in the world, with a trading volume of 5.1 trillion US dollars per day, As stated in the report issued by the Bank for International Settlements, the global bank of national central banks, trading takes place on the basis of the idea of selling one currency in exchange for another.
– This process is referred to in the form of currency pairs as follows:-
When you sell dollars and buy British pounds, it is symbolized by GBP/USD
The basic currency is on the left side, and is symbolized by the first two letters as an abbreviation for the name of the country, and the last letter representing the name of the currency, and written on the right side, an abbreviation for the currency in which it is priced, in the same way, the first two letters are an abbreviation for the name of the country and and the last letter symbolizes the currency.
– The exchange rate of currencies can be interpreted, as if it expresses the number of currencies that one unit of the base currency can buy from the quote currency. An example of this can be given as follows:-
It can be interpreted as the number of units of a dollar that one euro can buy.
On this basis, we find that currency traders, for example, tend to buy the euro with the dollar, if the euro rises against the dollar.
– Conversely, they sell the euro, when it falls.
– We conclude from this the rule of trade in the currency market, which is that traders go directly to buy the currency pair in the event that the price of the base currency rises against the quote currency, and they tend to sell in the event that the price of the quote currency decreases against the base currency.
Smart Riyal and Cryptocurrency
Saudi Arabia’s approach to Bitcoin and blockchain is similar to China: initially against, and eventually may turn to digital currencies. The kingdom has invested heavily in technology-focused projects, such as the planned smart city and Neom tourism hub.
This is part of Saudi Vision 2030, a wide-ranging plan to put Saudi Arabia at the forefront of international development as well as rehabilitate the kingdom’s image for foreign investors.
Neom is located in the far northwest of Saudi Arabia on the Red Sea near Jordan and Egypt. The city, which will cover a vast area of 26,500 square kilometers (10,200 square miles), will be powered entirely by renewable energy. It will also include technologies such as flying cars, robotic dinosaurs, and a giant satellite. The first phase is expected to be completed in 2025.
With these kinds of ambitious goals included in the project, it’s perhaps not surprising that someone is taking advantage of this hype to promote two cryptocurrencies that they claim are linked to the development of Neom. SmartRiyal and CryptoRial were two types of cryptocurrencies issued by a Singaporean company aimed at financing the construction of the smart city.
The Saudi Ministry of Finance warned in August 2019 that cryptocurrencies are not in any way related to NEOM. “Any use of the name of the Kingdom of Saudi Arabia, the national currency, or the national emblem by any entity to market virtual or digital currencies will be subject to legal procedures by the competent authorities in the Kingdom.” Therefore, you must trade through trading companies licensed by the Monetary Agency.
Most of the references to the project seem to have been removed from the internet, and CryptoRiyal.io is inaccessible. However, a cached version of the site shows that CryptoRiyal promoters are remarkably honest despite their fraudulent claim that “CryptoRiyal was created to meet the needs of NEOM, a newly constructed Saudi city powered entirely on renewable energy.”
The most popular currencies in the foreign exchange market
The most popular currency is the dollar/euro pair, EUR/USD
It accounts for approximately 30% of the trading volume, due to the strong economy of the USA and the European Union countries.
It is followed by the dollar and the Japanese yen, USD/JPY, with a 13.34% share of the forex market.
They are followed by GBP/USD with a trading volume of 11.27%.
Next comes the US dollar against the Canadian dollar, USD/CAD, with a trading ratio of 5.22%.
Finally, the US dollar against the Swiss franc, USD/CHF, with a trading volume of 4.63%.
How to manage the forex market
Forex has no headquarters, but is managed through a global network of banks.
This network extends through four global cities, each of which has its own timing, these cities are, New York, Tokyo, Sydney and London.
Traders can exchange currencies, electronically throughout the day.
Methods of trading in the forex market
There are several methods of trading in the forex market as follows:
¹- spot market
The preferred market for most traders.
It is traded, according to the current rates of currencies.
The operation on this day usually takes two days.
²- Delayed market
In which the sale or purchase is agreed upon under a contract, in which the price is agreed, but at a certain future date, or several future dates.
These contracts are legally binding on both parties.
³- future market
In which a contract is written, to buy or sell a certain currency in a certain quantity but at a future date.
Factors for choosing a trader’s plan to earn profits
There are several factors to choose the right plan for trading, including the following
The state of the financial market.
General currency exchange rate.
Possible opportunities during trading.
Policies of merchants to earn profits
Traders do not tend to follow the same policy and apply it forever, but most of them tend to learn many policies and plans, to trade and make profits in Forex.
There are many policies and plans that can be followed as follows
As the West calls it, breakout trading
This policy does not require a long time, focuses on long-term results.
²- Orientation Tracking
As the West calls it the trend following
In this policy, the market moves in the same direction for a certain period.
Therefore, traders should monitor the direction of the market, to be the first beneficiaries, after knowing the direction of the market.
³- mobile trading
This type of trading is concerned with currencies that do not change quickly for longer periods.
Where the high-priced currency is bought, the low-priced currency is sold.
⁴- Grid-type trading
The dates for stopping the sale and purchase are agreed upon in advance.
And that with a predetermined amount of profits, without stopping to lose.
⁵- Sentiment spread throughout the market
This feeling affects the trading volume, significantly.
From a lot of false breakouts occur, for forex trading plans.
⁷- Low rate of sudden fluctuations
It requires recording a period of low volatility, much like the false breakout policy.
Cryptocurrency trading in Saudi Arabia
Many ask Oman if buying cryptocurrency is legal in Saudi Arabia and the answer is that there are no restrictions on individuals buying or spending cryptocurrencies. On the other hand, banks are prohibited from dealing with cryptocurrency. The Saudi Arabian Monetary Agency has warned against digital currencies because they are not monitored or supported by any regulatory body.
However, as we will discuss later, the Saudi government clearly sees an advantage in blockchain technology and is actively working to implement it in its financial systems.
There are a handful of international exchanges like CoinMama open to crypto enthusiasts in Saudi Arabia, and some regional offerings.
One of the easiest ways to buy bitcoin in Saudi Arabia is through a cryptocurrency exchange. There are many exchanges offering cryptocurrency in Saudi Arabia, allowing you to choose one based on your requirements and preferences using our above list. Different exchanges have different transaction fees, withdrawal limits, payment methods, and verification processes to consider before choosing one.
Additionally, cryptocurrency buyers should keep in mind that some exchanges may require you to have your own wallet before you can purchase cryptocurrency. Even if there are no requirements, it is recommended that you have your own wallet for security reasons (preferably a hardware wallet). If you don’t have a wallet, check out our guide on the best crypto and Cryptocurrency wallets to choose one.