Foreign exchange, also known as Forex or FX, is the market in which currencies are traded. The Forex market is the largest, most liquid financial market in the world, open 24 hours a day, five days a week. To put it into perspective, the New York Stock Exchange handles approximately $169 billion worth of transactions a day, while the Forex Market sees over a colossal $5 trillion worth of transactions a day.
Forex is traded in currency pairs. Common currency pairs are the Euro/US Dollar, US Dollar/Japanese Yen, Great British Pound/US Dollar, and Canadian Dollar/US Dollar. You buy one currency and automatically sell another. The goal is to make a profit by buying and selling currencies as their value increases and decreases. There are many economic factors that contribute to currency movements which traders and dedicated analysts alike attempt to decipher.
The Forex market is open 24 hours a day, 5 days a week and currencies are traded worldwide among major financial centres. It opens on Sunday at 10:00 pm GMT, and closes on Friday at 10:00 pm GMT:
- Sydney is open from 10:00 pm to 7:00 am GMT
- Tokyo is open from 12:00 am to 9:00 am GMT
- London is open from 8:00 am to 5:00 pm GMT
- New York is open from 1:00 pm to 10:00 pm GMT
It depends on the leverage used and the amount of capital invested. You could invest a starting capital of $50, or $50 000, the sky is the limit. However, it is important to remember that increasing leverage, increases risk; ultimately it depends on a trader’s tolerance to and management of risk. Skilled traders are able to minimise risk and maximise profit thorough analysis, a trading strategy that suits their style and wise money management.
Unlike the stock market, the Forex market is not tied to a central exchange. Transactions are conducted between two counterparts over the telephone or via an electronic network, therefore the Forex market is considered an Over-the-Counter (OTC) or ‘Interbank’ market.
The primary participants in the Forex market – who make the spreads – are the largest banks in the world; Such banks include central Banks, commercial banks, and investment banks. Known as the interbank market as they constantly deal with each other on behalf of themselves or their customers. However, the percentage of other market participants is rapidly growing and now the list includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders and individual investors.
There are many factors that can and do contribute to currency prices. Such factors include economic and political events and announcements, interest rates, inflation, natural disasters and the list goes on. There is even debate over a mass psychology of how traders perceive the market at a certain point in time, which could contribute to how many base their trading decisions and thus influence the market. While there is absolutely no Holy Grail and sure way to predict price movements, there are some very thorough techniques implemented by analysts in an attempt to forecast potential price movements.
You only need a computer with internet connection and a free demo account or a funded live account with FX TRADING SIGNALS to start. However, you should be equipped with proper Forex education and tools to minimize risks in the Forex market.
Reading through this FAQ is a great start! Be sure to check out the other educational content we offer such as – training programs, seminars, webinars and video tutorials. Creating a demo account is definitely your first step toward successful trading, novice and expert traders alike make use of demo accounts to get a feel for the platform, test and perfect trading strategies and configure various add-ons, plugins, scripts and indicators. More importantly, you will see the market as it exists in a live account and nothing beats a hands-on approach while you do your research. Demo accounts are both free of charge and risk. For more information simply contact your account manager. If you do not yet have an account manager open a demo account and one will be in touch soon.
Essentially you will want the market to move in your favour. You can move the odds in your favour by analysing the market in various ways. Technical analysis involves trends, historical data and current market movements. It takes a more statistical approach to trading by thoroughly examining the charts and indicators. Alternatively you have fundamental analysis which focuses more on important economic events and announcements which are likely to influence the market. In either case you should attempt to capitalise on potential market movements with a formulated trading strategy, wise decision making and clever money management. The sum of your profit depends on the efficiency of your trading strategy, on how well you learn to predict the alteration in rates and their tendencies and on the amount of your deposit which allows you to sustain unfavourable situations during market movements as well as capitalise on good trading opportunities.