Forex (or FX) stands for Foreign Exchange, which is the 'place' where currencies are traded. In this market, exchanging one currency for another is called currency trading, which is always done in pairs. For example, if a trader wanted to exchange Euro (EUR) for US Dollar (USD), the currency pair he would trade would be the EURUSD. Trading currencies implies that a trader simultaneously buys one currency while selling the other. Various economic, political, and environmental factors contribute to the changing values of currencies, and forex traders buy and sell currencies in order to take advantage of these swings in value. The forex market is a global, decentralised market, which has the greatest volume of trading than any other market at $5 trillion per day, has no physical location or central exchange and it trades 24 hours a day, 5 days a week.
How can I make money from forex trading?
The idea is to predict how a currency pair's price will move, and open a position based on that prediction. You could profit from either a rise in price by going long or a fall in price by going short.
How much will it cost to trade forex?
There’s usually no commission or fees to pay. Brokers are paid through the ‘spread’, which is the difference between the bid and ask prices.
What about trading capital?
You can start trading on FXTM for as little as $10. You don’t need a huge deposit, as trading with leverage reduces the initial amount you need to open a position.
Note: Leverage is dependent on your knowledge and experience, and can increase your losses as well as your profits.
Which currency pairs are traded most in forex?
The most popular currency pair is EUR/USD, followed by USD/JPY, GBP/USD, AUD/USD, USD/CHF, USD/CAD, and NZD/USD. These pairs are known as the 'majors.'
How is the exchange rate for a currency pair measured in forex?
The standard unit of measurement for change in value between currencies is the pip. It stands for 'point in price' or 'percentage in point'.
What are the main benefits of trading forex?
In the forex market, you can:
- Trade 24 hours a day, 5 days a week.
- Make your money go further with leverage.
- Capitalise on high liquidity and volatility.
- Trade at low cost.