The foreign exchange (also known as "forex" or "FX") market is the place where currencies are traded. The overall forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world. There is no central marketplace for currency exchange, rather, trade is conducted over-the-counter. The forex market is open 24 hours a day, five days a week, with currencies being traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - spanning most time zones.The forex is the largest market in the world in terms of the total cash value traded, and any person, firm, or country may participate in this market.
Why FOREX Trading?
Today the Forex market is gaining in popularity in the main stream of financial investing, due to the advent of bad stock market practices and bad returns to investors. Benefits and advantages of the FX market such as its flexibility 24 hrs/6 days per week, high leverage, greater transparency than all other markets and its liquidity of 2 trillion per day, more traders will continue to be drawn to the market.
How high are the risks in FOREX trading?
The risks can be high but also controllable. Forex traders around the world are competing against other forex traders, banks, and institutional traders who are seeking the same potential rewards from their own trading activities. Money management, discipline, talent, and a lack of emotion are traits you will want to develop in FOREX trading. But remember, FOREX Trading is speculative and any capital used should be risk capital.
What is a Pip?
The smallest movement in a currency. Often referred to as "ticks" in the futures markets. For example, in EUR/USD, a move from 1.2080 to 1.2081 is one pip. In USD/JPY, a move from 110.51 to 110.52 is one pip.
What are "long" or "short" positions?
A long position is one in which you buy a currency at one price, with the expectation of selling it later on at a higher price. Obviously, you anticipate that the market will rise. A short position is one in which you sell a currency with the expectation of buying it back at a lower price. Here, you expect the market to fall. Every FX position you take automatically entails going long in one currency, and short the other. If you buy one, by default you are shorting the other.
What is a Limit order?
A limit order is an order with restrictions on the maximum price to be paid or the minimum price to be received.
What is a Stop Loss order?
A stop loss order is an order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor's position.
What do the terms "bid/ask" and "spread" mean?
Bid is the highest price that the seller is offering for a particular currency at the moment; ask is the lowest price acceptable to the buyer. Together, the two prices constitute a quotation; the difference between the two is called the spread.
What is the minimum start up trading capital?
Broker dealers offer great variability about amounts for opening an account this depending greatly if they offer mini contracts or only full contracts.
Forex dealers can set their own minimum account sizes, so you will have to ask the dealer how much money you must put up to begin trading. Most dealers will also require you to have a certain amount of money in your account for each transaction. This security deposit, sometimes called margin, is a percentage of the transaction value and may be different for different currencies.
For taking every trade our system announces you should consider that we may have one open position for each pair at the same time.
Is Forex trading expensive?
No. Most online Forex brokers allow customers to execute margin trades at up to 100:1 leverage. This means that investors can execute trades of $100,000 with an initial margin requirement of $1000. However, it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great. A more pragmatic margin trade for someone new to the FX markets would be 10:1 but ultimately depends on the investor's appetite for risk.
What is Margin?
Margin is essentially collateral for a position. It allows traders to take on leveraged positions with a fraction of the equity necessary to fund the trade. In the equity markets, the usual margin allowed is 50% which means an investor has double the buying power.
In the forex market leverage ranges from 1% to 2%, giving investors the high leverage needed to trade actively
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