- What is Foreign Exchange Trading?
- Starting a Forex Trading Company – A Complete Guide
- How does the market function?
- A Simple Explanation of Forex - Investopedia Academy
- What is a forex pair?
- What impacts the price of a foreign currency?
- Why Learn Trading Online?
- Is it safe to trade forex?
- Save Your Login Credentials
- How can you become a forex trader?
Welcome to Forex Trading.company!
Here we hope to provide you with the tools, tips and strategies you need to learn to trade forex. We don't have a full tutorial yet, but we've collected some of the best strategies, such as fundamental and technical analysis, guides to major forex indicators and reviews of the best forex brokers to help you start profiting from the currency markets.
We've also got tools for more experienced traders, such as our live forex trading charts, complete with the latest currency news and insights from the market.
There's also an exploration of other ways to trade, such as spread betting, trading binary options and social trading. We also cover a range of techniques, from CFD trading strategies to day trading forex, as well as other instruments such as commodities, ETFs and specific markets such as oil trading and gold trading.
What is Foreign Exchange Trading?
The foreign exchange market, commonly known as “Forex” or “FX”, is the exchange of one currency for another at an agreed-upon price.
A trader buys one currency and selling another at the same time, and this is why exchange rates are expressed in terms of currency pairs.
Starting a Forex Trading Company – A Complete Guide
You buy dollars for pounds; you sell roubles for South African Rand – by definition, you cannot buy or sell a given currency without acquiring another one.
The value of currencies changes constantly, due to events in:
Thecommon goal of traders is toprofit from these changes in the value of one currency against another - by actively speculating on which way currency prices are likely to turn in the future.
How does the market function?
The global currency market is very different from those of stock markets.
There are no local forex markets: Currencies are traded in one single global forex market that operates 24 hours a day, from 10 p.m.
GMT on Sunday to 10 p.m.
A Simple Explanation of Forex - Investopedia Academy
GMT on Friday.
There are, however, local market hours that have an effect on trading, even if trading does not cease when these market close – for example, the London Forex Market opens at 8:00 a.m.
GMT on Monday and closes that evening at 5:00 p.m. GMT.
Trading in the British pound goes on without the slightest interruption after 5:00 p.m. GMT.
That said, trading volume can be considerably lower outside of local banking hours which can give rise to increased volatility, leading to larger price movements and risk.
There are a great deal more trades of the British pound during the opening hours of the London market, and there are specific trading patterns observable during open market hours.
What is a forex pair?
A forex pair is a term such as 'EURUSD', 'GBPUSD' or 'USDJPY', which can be used to find a price for one currency versus another.
For example, the pair USD/JPY describes how many Japanese Yen (JPY) you can buy with one US Dollar (USD). The first currency is the base currency you are using to buy, while the second currency symbol is the units you will receive on a trade.
For example, the forex quote of GBPUSD denotes how many USD you will receive for the cost of 1 GBP.
These prices are calculated in real time based on trades from all around the world.
The trading market is international and operates 24/7 meaning these prices can change all the time. Forex traders seek to profit over the price movements in the market, using leverage to buy currencies at a low price and sell at a higher price.
Trading opportunities can present themselves due to news and technical market analysis that suggests a rising or falling trend in price.
Learn more: Understanding currency pairs
What impacts the price of a foreign currency?
The price of a foreign currency is in many ways a reflection of investor's confidence in that country's economy. The global market in forex can move on the basis of a headline, surprising economic data or a myriad of other reasons, but one of the biggest factors is the country's interest rate.
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Typically when a central bank raises the interest rate funds from around the world will flood in, seeking to earn more from their cash. This increases the demand for a currency and pushes up the price. Likewise a cut will have investors wondering if they can seek better returns elsewhere, leading to a fall in the currency's value. Of course any suggestion a cut or raise could be imminent could influence the price long before the rate changes. Sometimes a policy decision is so well known in advance it is considered 'priced in', and on the day there may be little to no movement at all.
Is it safe to trade forex?
Trading currencies can be lucrative, however it's not surprising that it comes with a heavy risk warning.
The majority of retail traders - as high as 80% - will lose money. Currency trading is highly speculative and unpredictable, and due to leveraged trades a position may shift from winning to losing quickly despite only a small change in price.
Organisations such as the Financial Conduct Authority in the UK and ECSMA in Europe have raised concerns and are in the process of introducing more legislation to protect traders, but for now it's important to research carefully before committing to a risky trade.
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See Is Forex Trading A Safe Investment?
How can you become a forex trader?
To start trading the currency market you will need to open a trading account at a good forex broker.
Most platforms will offer a demo account to allow you to get to grips with the system before committing real money, so use it widely.
Software platforms vary - the most popular, Metatrader 4 (MT4) may be a little overwhelming for beginners, and there are many new and polished web based alternatives to consider. Learn How to make money trading forex