WHAT IS FOREX?
The foreign exchange, or forex market is a “place” where different currencies are exchanged and traded.
In the free market economy, each country’s currency is measured according to supply and demand factors. The need for people, governments and institutions to exchange currencies every day is the reason why the forex market is the largest and most liquid financial market in the world.
In fact, according to the Bank for International Settlements Triennial Central Bank Survey of foreign exchange and OTC derivative markets in 2016, trading in forex markets averaged $5.1 trillion per day in April 2016.
One of the main advantages of forex trading is that there is no need of a central market place and currency trading is conducted electronically “over-the-counter”. The market is open 24 hours a day, 5 days a week from the open in south-east Asia on Monday to the close in New York on Friday afternoon.
TRY A RISK-FREE EXPERIENCE
Open a demo account to gain market experience and try out new strategies without taking any financial risk.
TRADE CFDs ON THE FOREIGN EXCHANGE MARKET
We offer low competitive spreads and fast, efficient execution on more than 100 currency pairs including major, minor crosses, exotic and Nordic pairs.
FOREX TRADING CONDITIONS
Check out the spreads, margin requirements and trading hours for some of the FX pairs we offer:
|MAJOR PAIRS||SPREADS*||LEVERAGE||TRADING HOURS||PIP VALUE**|
|EURUSD||1.5||1.1||0.9||0.7||1:30||1:100||Sun 23:05 – Fri 22:55 CET||USD 10|
|GBPUSD||1.8||1.4||1.2||1||1:30||1:100||Sun 23:05 – Fri 22:55 CET||USD 10|
|USDJPY||1.6||1.2||1||0.8||1:30||1:100||Sun 23:05 – Fri 22:55 CET||JPY 100|
|USDCHF||1.9||1.5||1.3||1.1||1:30||1:100||Sun 23:05 – Fri 22:55 CET||CHF 10|
|USDCAD||1.8||1.4||1.2||1||1:30||1:100||Sun 23:05 – Fri 22:55 CET||CAD 10|
|AUDUSD||1.7||1.3||1.1||0.9||1:20||1:100||Sun 23:05 – Fri 22:55 CET||USD 10|
|NZDUSD||1.8||1.4||1.2||1||1:20||1:100||Sun 23:05 – Fri 22:55 CET||USD 10|
|XAUUSD||21||17||15||13||1:20||1:100||Mon 00:05 – Fri 22:59 CET||USD 10|
* Target spread. The underlying market spread may vary throughout the trading day, and depends on the market conditions. The platform spread thus may also vary. ** Pip value indicated is based on a standard contract traded. Pip value may vary according to the size of the trade.
Here are our answers to
your frequently asked questions about forex:
What is forex?
What is forex trading and how does it work?
One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly.
The foreign exchange market (forex or FX for short) is one of the most exciting, fast-paced markets around. Until recently, forex trading in the currency market had been the domain of large financial institutions, corporations, central banks, hedge funds and extremely wealthy individuals. The emergence of the internet has changed all of this, and now it is possible for average investors to buy and sell currencies easily with the click of a mouse through online brokerage accounts.
Daily currency fluctuations are usually very small. Most currency pairs move less than one cent per day, representing a less than 1% change in the value of the currency. This makes foreign exchange one of the least volatile financial markets around. Therefore, many currency speculators rely on the availability of enormous leverage to increase the value of potential movements. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity, foreign exchange brokers have been able to make high leverage an industry standard in order to make the movements meaningful for currency traders.
How to trade forex?
Fundamental analysis involves assessing the economic well-being of a country, and by extension, the currency. It does not take into account currency price movements. Rather, fundamental forex traders will use data points to determine the strength of a particular currency.
A fundamental forex trader will analyze the country’s inflation, trade balance, gross domestic product, growth in jobs and even their central bank's benchmark interest rate.
Technical analysis involves pattern recognition on a price chart. Technical traders look for price patterns such as triangles, flags, and double bottoms. Based on the pattern, a trader will determine the entry and exit points. Unlike fundamental traders, a technical trader is not as concerned about why something is moving because the trends and patterns on the charts are their signals.
How to read forex charts?
Line Charts: A simple line chart draws a line from one closing price to the next closing price. When strung together with a line, we can see the general price movement of a currency pair over a period of time.
Bar Charts: A bar chart is a little more complex. It shows the opening and closing prices, as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price for that time period, while the top of the bar indicates the highest price paid. The vertical bar itself indicates the currency pair’s trading range as a whole. The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.
Candlestick Charts: Candlestick charts show the same price information as a bar chart, but in a prettier, graphic format. Candlestick bars still indicate the high-to-low range with a vertical line. However, in candlestick charting, the larger block (or body) in the middle indicates the range between the opening and closing prices. Traditionally, if the block in the middle is filled or colored in, then the currency pair closed lower than it opened. In the following example, the ‘filled color’ is black. For our ‘filled’ blocks, the top of the block is the opening price, and the bottom of the block is the closing price. If the closing price is higher than the opening price, then the block in the middle will be “white” or hollow or unfilled.
What time does the forex market open?
- Sydney 5pm to 2am EST (10pm to 7am UTC)
- Tokyo 7pm to 4am EST (12am to 9am UTC)
- London 3am to 12 noon EST (8pm to 5pm UTC)
- New York 8am to 5pm EST (1pm to 10pm UTC)
In our case, our time zone is CET, hence the forex market is open from Sunday 23:00pm until Friday 22:59CET.
How do institutions trade forex?
What is the spot market?
What are the forwards and futures markets?
In the forwards market, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves.
In the futures market, futures contracts are bought and sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. In the U.S., the National Futures Association regulates the futures market. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that cannot be customized. The exchange acts as a counterpart to the trader, providing clearance and settlement.
Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well.
Note that you'll see the terms: FX, forex, foreign-exchange market and currency market. These terms are synonymous, and all refer to the forex market.
What is leverage in forex?
However, by using a leverage of 1:100, every $1 you invest is worth $100, so with your $1000 margin you can open a $100,000 deal. As a result, your $10 profit is magnified to $1000.
Another way to think about leverage is to think of it as a loan. If you have $1000 and take a ‘loan’ that equates to $100 for every one of your dollars, you have $100,000 to trade with. Once your trade has been concluded, you return the ‘loan’ amount and keep the resulting profit.
It's important to note that leverage is often considered a double-edged sword since large price swings on accounts with higher leverage increase their chances of experiencing losses especially when the account is not adequately capitalized and the individual or entity lacks a full understanding on the proper use of leverage. As a result, novice traders are encouraged to use minimal leverage whilst they increase their knowledge and experience but also as an exercise on how to make use of leverage properly which will translate into better risk management. The more seasoned professional can use leverage as a tool to accelerate their returns and grow their initial investment.
What are swaps in forex?
What is spread in forex?
Forex brokers quote two different prices for currency pairs: the bid and ask price. The “bid” is the price at which you can sell the base currency. The “ask” is the price at which you can buy the base currency. The difference between these two prices is known as the spread. The spread is how “no commission” brokers make their money. Instead of charging a separate fee for making a trade, the cost is built into the buy and sell price of the currency pair you want to trade. Therefore, a broker that doesn’t charge commission has typically built in the cost of initiating and closing the trade into the spread and this is the broker’s fee.
Start trading now!
Start trading now!
Our CFDs are leveraged products which can carry a high level of risk to your capital and investing in them can result in losses that exceed your initial deposit. Investors do not own, or have any rights to, the underlying assets. These products may not be suitable for all investors. Please make sure that you fully understand the risks involved and seek independent advice if necessary.