Use leverage wisely: As we've already mentioned, Forex CFDs allow you to trade on a margin, or by using leverage. However, just because 1:30 (or 1:500) leverage is available, it doesn't mean that you need to use it. At Admiral Markets, while there is a maximum amount of leverage available to our clients, they are still able to choose the amount of leverage they use when they are trading, which may be anything up to that amount.
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In the above hourly price chart, it is clear to see there has been multiple interactions with the 21 EMA. Sometimes price has bounced off the moving average and sometimes it has broken through. As it has bounced off more times than it has broken through this 'setup' can serve as the basis of this strategy. So now let's identify some rules around this.
Basically, the Forex market is where banks, businesses, governments, investors and traders come to exchange and speculate on currencies. The Forex market is also referred to as the ‘Fx market’, ‘Currency market’, ‘Foreign exchange currency market’ or ‘Foreign currency market’, and it is the largest and most liquid market in the world with an average daily turnover of $3.98 trillion.
Since the market is made by each of the participating banks providing offers and bids for a particular currency, the market pricing mechanism is based on supply and demand. Because there are such large trade flows within the system, it is difficult for rogue traders to influence the price of a currency. This system helps create transparency in the market for investors with access to interbank dealing.
These cover the bulk of countries outside Europe. Forex brokers catering for India, Hong Kong, Qatar etc are likely to have regulation in one of the above, rather than every country they support. Some brands are regulated across the globe (one is even regulated in 5 continents). Some bodies issue licenses, and others have a register of legal firms.
In 1876, something called the gold exchange standard was implemented. Basically it said that all paper currency had to be backed by solid gold; the idea here was to stabilize world currencies by pegging them to the price of gold. It was a good idea in theory, but in reality it created boom-bust patterns which ultimately led to the demise of the gold standard.

An investor can profit from the difference between two interest rates in two different economies by buying the currency with the higher interest rate and shorting the currency with the lower interest rate. Prior to the 2008 financial crisis, it was very common to short the Japanese yen (JPY) and buy British pounds (GBP) because the interest rate differential was very large. This strategy is sometimes referred to as a "carry trade."
From a historical standpoint, foreign exchange was once a concept for governments, large companies, and hedge funds. But in today's world, trading currencies is as easy as a click of a mouse—accessibility is not an issue, which means anyone can do it. In fact, many investment firms offer the chance for individuals to open accounts and to trade currencies however and whenever they choose.
Once Nixon abolished the gold standard, the dollar's value quickly plummeted. The dollar index was established to give companies the ability to hedge this risk. Someone created the U.S. Dollar Index to give them a tradeable platform. Soon, banks, hedge funds, and some speculative traders entered the market. They were more interested in chasing profit than in hedging risks. 
^ The total sum is 200% because each currency trade always involves a currency pair; one currency is sold (e.g. US$) and another bought (€). Therefore each trade is counted twice, once under the sold currency ($) and once under the bought currency (€). The percentages above are the percent of trades involving that currency regardless of whether it is bought or sold, e.g. the U.S. Dollar is bought or sold in 88% of all trades, whereas the Euro is bought or sold 32% of the time.

The sheer size of the forex, or foreign exchange, market dominates all others — even the stock market. Every payment that crosses currencies contributes to its fluctuations and momentum. And without a centralized marketplace, forex activity buzzes practically without cease, with traders waking up and doing business everywhere, in every time zone. To get a piece of the action, you need a forex brokerage with best-in-class technology and stellar support.
If you've been researching Forex trading, you might have seen the term 'Forex CFDs' at some point. There are two ways to trade Forex: using CFDs or spot Forex (also known as margin). Spot Forex involves buying and selling the actual currency. For example, you might purchase a certain amount of Pound Sterling for Euros, and then, once the value of the Pound increases, you may then exchange your Euros for Pounds again, receiving more money back compared with what you originally spent on the purchase.
Forex is the one financial market that never sleeps, meaning you can trade at all hours of the day (or night). Unlike the world's stock exchanges, which are located in physical trading rooms like the New York Stock Exchange or the London Stock Exchange, the Forex market is known as an 'Over-the-counter market' (or OTC). This means that the trades take place directly between the parties holding the currencies, rather than being managed via an exchange.
Currency carry trade refers to the act of borrowing one currency that has a low interest rate in order to purchase another with a higher interest rate. A large difference in rates can be highly profitable for the trader, especially if high leverage is used. However, with all levered investments this is a double edged sword, and large exchange rate price fluctuations can suddenly swing trades into huge losses.
Governments / Central banks – A country’s central bank can play an important role in the foreign exchange markets. They can cause an increase or decrease in the value of their nation’s currency by trying to control money supply, inflation, and (or) interest rates. They can use their substantial foreign exchange reserves to try and stabilize the market.
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Diversify your portfolio: We all know the saying, 'don't put all your eggs in one basket', yet many new FX traders do this when it comes to their trading. Just as it isn't wise to put all of your funds into a single trade, relying on a single currency pair increases your level of risk, because if the pair moves in a different direction to what you expect, you could lose everything. Instead, consider opening a number of small trades across different Forex pairs.

Demo Account: Although demo accounts attempt to replicate real markets, they operate in a simulated market environment. As such, there are key differences that distinguish them from real accounts; including but not limited to, the lack of dependence on real-time market liquidity, a delay in pricing, and the availability of some products which may not be tradable on live accounts. The operational capabilities when executing orders in a demo environment may result in atypically, expedited transactions; lack of rejected orders; and/or the absence of slippage. There may be instances where margin requirements differ from those of live accounts as updates to demo accounts may not always coincide with those of real accounts.
This information can then allow traders to make judgements regarding a currency pair's price movement. For example, if a Japanese candlestick closes near the highest price for the period, that would imply that there is a strong interest on the part of buyers for this currency pair during that time period. A trader might then decide to open a long trade to take advantage of that interest.
The possibility of losing your investment is high, so it is advisable to only use risk capital (money that you can afford to lose) when engaging in Forex trading. The Forex market offers high levels of leverage to traders. Leverage has both the possibility of high returns and high losses, and should only be used with discretion. Be disciplined and don't be tempted to overtrade.

Currency speculation is considered a highly suspect activity in many countries.[where?] While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital, currency speculation does not; according to this view, it is simply gambling that often interferes with economic policy. For example, in 1992, currency speculation forced Sweden's central bank, the Riksbank, to raise interest rates for a few days to 500% per annum, and later to devalue the krona.[82] Mahathir Mohamad, one of the former Prime Ministers of Malaysia, is one well-known proponent of this view. He blamed the devaluation of the Malaysian ringgit in 1997 on George Soros and other speculators.


Currencies are always traded in pairs, so the "value" of one of the currencies in that pair is relative to the value of the other. This determines how much of country A's currency country B can buy, and vice versa. Establishing this relationship (price) for the global markets is the main function of the foreign exchange market. This also greatly enhances liquidity in all other financial markets, which is key to overall stability.
The logistics of forex day trading are almost identical to every other market. However, there is one crucial difference worth highlighting. When you’re day trading in forex you’re buying a currency, while selling another at the same time. Hence that is why the currencies are marketed in pairs. So, the exchange rate pricing you see from your forex trading account represents the purchase price between the two currencies.

Money transfer companies/remittance companies perform high-volume low-value transfers generally by economic migrants back to their home country. In 2007, the Aite Group estimated that there were $369 billion of remittances (an increase of 8% on the previous year). The four largest foreign markets (India, China, Mexico, and the Philippines) receive $95 billion. The largest and best-known provider is Western Union with 345,000 agents globally, followed by UAE Exchange.[citation needed] Bureaux de change or currency transfer companies provide low-value foreign exchange services for travelers. These are typically located at airports and stations or at tourist locations and allow physical notes to be exchanged from one currency to another. They access foreign exchange markets via banks or non-bank foreign exchange companies.
Automated Forex trades could enhance your returns if you have developed a consistently effective strategy. This is because instead of manually entering a trade, an algorithm or bot will automatically enter and exit positions once pre-determined criteria have been met. In addition, there is often no minimum account balance required to set up an automated system.
Use a stop loss: A stop loss is tool that traders use to limit their potential losses. Simply put, it is the price level at which you will close a trade that isn't moving in your favour, thereby preventing any further losses as the market continues to move in that direction. You can also use a stop loss to conserve any profits you might have already made - the tool to achieve this is known as a 'trailing' stop loss, which follows the direction of the market.
Becoming a successful Forex trader requires a good understanding of charts and how they work. You must also define your trading strategies and stick to them. Like any other investment activity, trading in Forex involves a lot of risks, and proper money management principles should be employed when undertaking it. Although anyone can trade in Forex, it is definitely not for everyone. You need to have an appetite for, and an understanding of the risks and technicalities involved.
Most retail Forex traders are in fact day traders, and such traders do tend to generate the highest volumes. Becoming a day trader is an extensive process and once you commit to it, you will have to go through a lot of trial and error. Your discipline, stress resistance, and your confidence in your skills will be put to the test. If you are ready and understand the risks, why not apply for a live account with Admiral Markets and see what day trading is all about?
This is an efficient trading strategy for those who keep up with economic and political events, but who cannot devote enough attention to the markets on an hourly basis. A trader will generally execute far fewer trades with the breakout strategy, especially when compared to a Forex scalping strategy. Nevertheless, this is a great strategy to consider and try out.
In the context of the foreign exchange market, traders liquidate their positions in various currencies to take up positions in safe-haven currencies, such as the US dollar.[85] Sometimes, the choice of a safe haven currency is more of a choice based on prevailing sentiments rather than one of economic statistics. An example would be the financial crisis of 2008. The value of equities across the world fell while the US dollar strengthened (see Fig.1). This happened despite the strong focus of the crisis in the US.[86]

Secondly, a larger return is needed on your remaining capital to retrieve any lost capital from the initial losing trade. If a trader loses 50% of their capital, it will take a 100% return to bring them back to the original capital level. Losing large chunks of money on single trades or on single days of trading can cripple capital growth for long periods of time.
The foreign exchange market works through financial institutions and operates on several levels. Behind the scenes, banks turn to a smaller number of financial firms known as "dealers", who are involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the "interbank market" (although a few insurance companies and other kinds of financial firms are involved). Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars. Because of the sovereignty issue when involving two currencies, Forex has little (if any) supervisory entity regulating its actions.
None of the models developed so far succeed to explain exchange rates and volatility in the longer time frames. For shorter time frames (less than a few days), algorithms can be devised to predict prices. It is understood from the above models that many macroeconomic factors affect the exchange rates and in the end currency prices are a result of dual forces of supply and demand. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.[71]

None of the models developed so far succeed to explain exchange rates and volatility in the longer time frames. For shorter time frames (less than a few days), algorithms can be devised to predict prices. It is understood from the above models that many macroeconomic factors affect the exchange rates and in the end currency prices are a result of dual forces of supply and demand. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.[71]
In the forex market currencies trade in lots, called micro, mini, and standard lots. A micro lot is 1000 worth of a given currency, a mini lot is 10,000, and a standard lot is 100,000. This is different than when you go to a bank and want $450 exchanged for your trip. When trading in the electronic forex market, trades take place in set blocks of currency, but you can trade as many blocks as you like. For example, you can trade seven micro lots (7,000) or three mini lots (30,000) or 75 standard lots (750,000), for example.
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It is estimated that in the UK, 14% of currency transfers/payments are made via Foreign Exchange Companies.[65] These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank.[66] These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services. The volume of transactions done through Foreign Exchange Companies in India amounts to about US$2 billion[67] per day This does not compete favorably with any well developed foreign exchange market of international repute, but with the entry of online Foreign Exchange Companies the market is steadily growing. Around 25% of currency transfers/payments in India are made via non-bank Foreign Exchange Companies.[68] Most of these companies use the USP of better exchange rates than the banks. They are regulated by FEDAI and any transaction in foreign Exchange is governed by the Foreign Exchange Management Act, 1999 (FEMA).
This will ensure that if you decide to trade stocks, indices, ETFs, commodities, cryptocurrencies and other instruments in the future, you won't need to find a new broker to do so. Admiral Markets, for example, provides traders with access to over 7,500 financial instruments, allowing you to create a diversified trading and investment strategy from a single platform.
We will cover how you can start trading (including choosing the best broker and trading software), the fundamentals of risk management, the different ways you can analyse the Forex market, and an overview of the most popular trading strategies. By the end of this guide, you will have the knowledge you need to start testing your trading skills with a free Demo account, before you move onto a live account.
Imagine a trader who expects interest rates to rise in the U.S. compared to Australia while the exchange rate between the two currencies (AUD/USD) is .71 (it takes $.71 USD to buy $1.00 AUD). The trader believes higher interest rates in the U.S. will increase demand for USD, and therefore the AUD/USD exchange rate will fall because it will require fewer, stronger USD to buy an AUD.
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