Currencies are traded in FOREX…BUT…simple answer is MONEY!
Think of trading as buying a share in a specific country, like buying stocks of a company. The price of the currency is usually a direct reflection of the market’s opinion on the current and future health of its respective economy.
In FX, when you buy, Japanese yen, you're buying a “share” in the Japanese economy. You are betting that the Japanese economy is doing well, and will get better in future.
Generally, the exchange rate of a currency versus other currencies is a reflection of that country’s economy, compared to other countries’ economies.
The most imporant currencies are MAJORS.
Major currencies are: USD, EUR, JPY, CHF, GBP, NZD, AUD, CAD.
That means there are 28 instruments made by two of those upper currencies, for example EUR/USD.
Next are called minor.
Example: SGD (singaporian dollar), MXN (mexican peso)
And the last section of currencies are called exotics.
Example: CZK, NOK, SEK, ISK, DKK..
