Forex Trading with view of participating in the foreign currency exchange (or “forex”) market need to understand fully the market and its unique characteristics. Forex trading can be very risky and is not appropriate for all investors. It is common in most forex trading strategies to employ leverage. Leverage entails using a relatively small amount of capital to buy currency worth many times the value of that capital. Leverage magnifies minor fluctuations in currency markets in order to increase potential gains and losses. By using leverage to trade forex, you risk losing all of your initial capital and may lose even more money than the amount of your initial capital. You should carefully consider your own financial situation, consult a financial adviser knowledgeable in forex trading, and investigate any firms offering to trade forex.
Understand CFD Trading
What is a CFD (Contract for Difference)?
Contracts for difference (CFDs) are one of the world’s fastest-growing trading instruments. A contracts for difference creates, as its name suggests, a contract between two parties speculating on the movement of an asset price. The term ‘CFD’ which stands for ‘contract for difference’ consists of an agreement (contract) to exchange the difference in value of a particular currency, commodity share or index between the time at which a contract is opened and the time at which it is closed.
The contract payout will amount to the difference in the price of the asset between the time the contract is opened and the time it is closed. If the asset rises in price, the buyer receives cash from the seller, and vice versa. There is no restriction on the entry or exit price of a CFD, no time limit is placed on when this exchange happens and no restriction is placed on buying first or selling first. CFDs are traded on leverage to give traders more trading power, flexibility and opportunities
How to benefit from Forex Market
A foreign currency exchange rate is a price that represents how much it costs to buy the currency of one country using the currency of another country. Currency traders buy and sell currencies through forex transactions based on how they expect currency exchange rates will fluctuate. When the value of one currency rises relative to another, traders will earn profits if they purchased the appreciating currency, or suffer losses if they sold the appreciating currency. sdiscussed below, there are also other factors that can reduce a trader’s profits even if that trader “picked” the right currency. Currencies are identified by hree-letter abbreviations.
For example, USD is the designation for the U.S. dollar, EUR is the designation for the Euro, GBP is the designation for the British pound, and JPY is the designation for the Japanese yen.
What is the estimated size of the Forex Market
Foreign exchange market is the largest financial market with a daily turnover of over USD 3 trillion. Foreign exchange markets were primarily developed to facilitate settlement of debts arising out of international trade. But these markets have developed on their own so much so that a turnover of about 3 days in the foreign exchange market is equivalent to the magnitude of world trade in goods and services. The largest foreign exchange market is London followed by New York, Tokyo, Zurich and Frankfurt.
What is the Timing of Forex Market
Honor FX pricing currently opens at 21:00 Sunday evening GMT and remains open until 21:00 Friday evening (00:00 – 24:00 server time). This will change as daylight savings changes in Australia and the US. Notice of the change is given to all Honor FX clients one week before the open time changes. As a guide, our MT4 market open coincides with 5pm on Sunday in New York.
How can I start trading Forex?
How much money do I need to start trading Forex?
With some Forex brokers you can start trading Forex with as little as $1.
What are the requirement to start Forex Trading
To be able to trade you only need a device with an internet connection and a funded trading account. In addition, we strongly recommend you to be equipped with Forex/CFD’s or other financial education and trading tools to help you minimize the risks in the market.