Forex trading is also known as foreign exchange trading, currency trading or FX trading.
What is forex?Forex trading involves the conversion of one currency into another. A lot of foreign exchange is done for practical purposes, but the vast majority is undertaken in order to try and turn a profit.
Foreign exchange rates are determined by a de-centralized or over-the-counter market where currencies are traded. It’s open to both major institutions and individual investors alike.
Can Anyone Day Trade?As long as they have access to the internet, any individual can day trade, as trading is usually conducted through an online broker. Now it is also possible to access the markets through mobile devices, which allows for much greater flexibility in any day trading schedule.
It is worth remembering that trading always carries at least some element of risk, and this risk increases when leverage is applied to investments. As such, day trading should be approached sensibly, with a willingness to analyze how each market behaves differently.
What is forex trading and how does it work?The forex market is a global currency trading market. It’s also sometimes called FX or FOREX. Here, one currency is exchanged for another in what’s known as a ‘currency pair’. There’s an exchange rate between each currency pair that fluctuates regularly.
Forex traders look to profit on fluctuating exchange rates, speculating on whether the price of one currency will go up or down against another.
Why Select Forex Trading?There are many reasons why this market would appeal to both new and experienced traders, and just some of them include:
- Accessibility, because with the power of leveraging you can trade large amounts of forex with just a small amount of capital;
- Benefit from long and short trades, because it is possible to trade currencies without acquiring them;
- Harness the power of technology, because trading platforms for forex allow you to trade almost instantly in a live environment;
- Availability, because forex trading occurs on a worldwide market which offers the opportunity to trade 24 hours a day, five days a week.
The risks involved in the forex marketAs there are advantages in trading in the forex market, there are equally as much risk involved. Similar to any type of trading, risk capital should always be utilized for investment. As the forex market is a highly volatile product, loss of capital can be incurred exponentially depending on market conditions. Negative slippage can be incurred during volatile market conditions, which will execute your order with a less favorable entry or exit price. On Sunday’s, market gaps can occur due to economical events around the world, these gaps may cause your account to obtain large losses and/or may leave your account balance in a negative state. Always take into consideration your financial circumstances and your risk appetite prior to establishing a forex trading account.
Currency trading basicsAlthough stocks and shares are traded singularly, all currency trading must be done in pairs. When forex trading, you simultaneously buy one currency and sell another.
For example, the GBP/USD currency pair is sterling vs the dollar. The first currency in the pair (in this case GBP) is known as the base. This is the currency you think will go up or down in value against the second currency (in this case USD), which is known as the quote.
Currencies are often priced to the fifth decimal point. The smallest increment of any trade is known as a ‘pip’, which stands for percentage in point.
Can you make money buying and selling currency?A forex investor can be an individual, a country or even a corporation. Anyone can trade forex online as long as they are astute enough and have enough financial capital.
The size of the market’s liquidity means that prices change rapidly, reacting to news and short-term events. This fluctuation creates opportunities for traders.
You can either take a long (buy) or short (sell) position depending on whether you think the currency’s value will go up or down. You would ‘buy’ a currency pair if you thought that the base currency would strengthen against the quote currency, or if you thought the quote currency would weaken against the base currency.
In contrast, you would sell a currency pair if you believed that the base currency would weaken against the quote currency. Or if you thought that the quote currency would strengthen against the base currency.
If you speculate incorrectly and the market moves against your position, you will make a loss.
Forex Trading with ATC BrokersOpen an account with ATC Brokers and you will not only have access to the forex market but will be able to benefit from our powerful trading platform – which includes charting and analysis abilities that can really make a difference when it comes to implementing your trading strategies.
In order to apply for your account with ATC Brokers, you need to provide a minimum of 3,000 USD as a deposit, or the equivalent in GBP or EUR. As a UK forex trader you can fund your account in a variety of ways and operate in a corporate, joint or individual capacity. At ATC Brokers we provide the flexibility, technology and customer service to ensure that you receive a smooth forex trading experience.