Forex trading is the simultaneous buying of one currency and selling of another. Currencies are quoted in pairs eg Euro vs. US Dollar. When one currency increases in value it means it strengthens against another and the value of the other decreases. Forex trading is a popular way to trade on financial markets as it is a true 24 hour market.
Cost Effective Trading
There is no commission to pay, no matter how often you deal or the size of your trade. Trade from as low as USD 10,000 (or equivalent) and as high as USD 1 Billion.
Margin Trading
Forex is traded on margin, typically 100:1 leverage. This is a more efficient use of your capital because you only have to allocate a very small proportion of the value of your position to secure a trade, while maintaining full exposure to the market. In effect you are able to magnify the returns on your investment. However it is important to note that although if the markets move in your favour profits will be magnified, if the position turns against you your losses will also be magnified.
24 Hour Market
Forex is an over-the-counter (OTC) market which means trades do not take place through a centralised exchange. This means that Forex trading can and does take place around the world 24 hours a day.
Trading starts in New Zealand followed by Sydney, and moves around the world to Tokyo, London, and New York. Unlike any other financial markets, investors can respond to currency fluctuations caused by economic, political and social events at the time they occur, without having to wait for markets to open.
Liquidity
The Forex market is the most heavily traded financial market in the world and with so many market participants trading over 24 hours; the Forex market is more liquid than any other financial market. This means clients have access to size, tight dealing spreads and lower margin rates than other financial market. It also means Forex markets are less prone to gapping than less liquid markets such as Equities
Cost Effective Trading
There is no commission to pay, no matter how often you deal or the size of your trade. Trade from as low as USD 10,000 (or equivalent) and as high as USD 1 Billion.
Margin Trading
Forex is traded on margin, typically 100:1 leverage. This is a more efficient use of your capital because you only have to allocate a very small proportion of the value of your position to secure a trade, while maintaining full exposure to the market. In effect you are able to magnify the returns on your investment. However it is important to note that although if the markets move in your favour profits will be magnified, if the position turns against you your losses will also be magnified.
24 Hour Market
Forex is an over-the-counter (OTC) market which means trades do not take place through a centralised exchange. This means that Forex trading can and does take place around the world 24 hours a day.
Trading starts in New Zealand followed by Sydney, and moves around the world to Tokyo, London, and New York. Unlike any other financial markets, investors can respond to currency fluctuations caused by economic, political and social events at the time they occur, without having to wait for markets to open.
Liquidity
The Forex market is the most heavily traded financial market in the world and with so many market participants trading over 24 hours; the Forex market is more liquid than any other financial market. This means clients have access to size, tight dealing spreads and lower margin rates than other financial market. It also means Forex markets are less prone to gapping than less liquid markets such as Equities
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