With an estimated daily volume of $5 trillion US dollars, the foreign exchange market is full of opportunity. Forex trading, sometimes called FX, foreign exchange or currency trading, allows investors to take advantage of fluctuations in the currency market. With Traze, you can start trading in Forex with institutional market prices and execution 24×5.
Traze offers 3 forex account types to suit the needs of all our clients. You can also open a free demo account to practice your strategies on our platforms. Read this guide to get a crystal-clear vision of the Forex market, and how to get started.
What is Forex?
Forex or FX is the short form of “Foreign Exchange” which refers to the conversion of one currency into another.
Forex trading allows investors to take advantage of fluctuations in the currency market. Just like any other form of speculation, you want to buy a currency at one price and sell it at a higher price to make a profit.
Forex is the world’s largest form of exchange, with an estimated 10 million people trading currency every year. Trading is conducted over the ‘interbank market’, an online channel through which currencies are traded 24 hours a day, five days a week. It’s open to major institutions and individual investors alike.
On the Forex market, trades in currencies are often worth millions, so small bid-ask price differences can soon add up to a significant profit. Of course, it’s also important to remember that it’s also possible to accrue serious losses when trading large volumes.
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What are the benefits of Forex trading?
- Opportunity 24/5: Forex never sleeps. With no set exchange hours, you can trade currencies whenever, wherever.
- Trade on margin: Increase your purchasing power with leverage, and potentially achieve big profits.
- Unparalleled liquidity: the liquid nature of the market makes it easy to get into and out of trades.
More about Forex trading
The Forex market is all about converting one currency into another with the aim of making a profit. It’s an excellent market to start your trading journey as you can trade on margin, meaning your initial investment is low.
To successfully trade Forex, you need to speculate on whether the price of your chosen currency will rise or fall. And, since Forex trading always involves selling one currency to buy another, it’s quoted in pairs.
The price of a currency pair is calculated as the cost of one unit of the base currency in the quote currency. There are seven currency pairs that make up 80% of global Forex trading, including EUR/USD, USD/JPY, GBP/USD, and USD/CHF.
The most popular vehicle used to trade FX is CFD – Contract for Difference. It enables you to speculate on the currency markets without making a physical trade.
A CFD is an agreement to exchange the difference in the price of a currency pair from when you open your position to when you close it. If the market price moves in your chosen direction, you would profit – but if it moves against you, you’ll end up making a loss.
Getting set up as a trader with Traze is simple.
First, you need to register for a trading account. You can do this online, and the process only takes minutes. Once you’ve added your personal information and verified your identity, you’ll need to deposit some funds to start trading with. The minimum deposit varies depending on the account you choose ($50 is the minimum for a Mini Trading account).
After successfully injecting some capital into your account, you’re ready to trade! Simply download the Traze trading platform and get started on the Forex market.
At Traze, we place technology at the heart of our trading. Our superior suite runs on the MetaTrader 4 platform, which is world-renowned for its Forex trading capability — although it’s also an effective tool for trading a range of markets, including indices, cryptocurrencies, and commodities, via CFDs.
The Traze MT4 trading platform is suitable for all devices, including Android and IOS, Windows, and Mac. That means you can use our platform on your mobile phone, your laptop, your iPad, or iPhone — so you can trade anytime, anywhere.
The Forex market never sleeps. You can trade at all hours of the day or night – and that’s one of the reasons it’s such an exciting part of the financial services world.
However, within this 24-hour market, there are three main trading sessions. First, there’s the London session. This is followed by the American session, based in New York, and then the Asian session located in Tokyo.
The sessions change in line with the time zones from West to East. This works out as: London session 08:00-17:00 (GMT), US session 13:00-22:00 (GMT), Asian session 00:00-09:00 (GMT).
There’s an overlap period between the London session and the US session, and this is known as the most liquid period of the day.
It’s important to note that every geographic centre exhibits its own unique traits and tendencies. It’s worth looking into these if you’re going to trade in lots of different markets.
There are lots of options for a new trader looking to get started in Forex with Traze.
You can take your first steps with a demo account, which is a totally free, no-risk way to practice making trades and get a feel for the currency markets.
In addition, we offer a range of trading tutorials on Forex (and many more markets beside) which are helpful for even the seasoned trader. And we know that traders are always excited to learn on the job. That’s why our trading platform provides best-in-class indicators and technical analysis tools, so you can make informed decisions and constantly sharpen your awareness, even as you pursue your market goals.
Leverage is the term used to describe your ability to control a large amount using little or even none of your own money and borrowing the rest. Leverage is expressed in ratios – so if, for example, you were controlling a $100,000 position, with only your $1,000 from your own account, your leverage would work out at 1:100. Your Forex profits will be calculated by this leverage ratio – the higher the ratio, the better your potential return.
Margin is the deposit you had to make to gain leverage. So, in our 1:100 ratio from earlier, your margin was the $1,000 you paid yourself. This margin acts as a “good faith deposit” which enables you to hold your position. It’s usually expressed as a percentage of the full amount of the position. For example, most Forex brokers say they require 2%, 1%, 0.5% or 0.25% margin.