The foreign exchange market is where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros. The same goes for traveling. A French tourist in Egypt can't pay in euros to see the pyramids because it's not the locally accepted currency. As such, the tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate.
All exchange rates are susceptible to political instability and anticipations about the new ruling party. Political upheaval and instability can have a negative impact on a nation's economy. For example, destabilization of coalition governments in Pakistan and Thailand can negatively affect the value of their currencies. Similarly, in a country experiencing financial difficulties, the rise of a political faction that is perceived to be fiscally responsible can have the opposite effect. Also, events in one country in a region may spur positive/negative interest in a neighboring country and, in the process, affect its currency.

Forex banks, ECNs, and prime brokers offer NDF contracts, which are derivatives that have no real deliver-ability. NDFs are popular for currencies with restrictions such as the Argentinian peso. In fact, a forex hedger can only hedge such risks with NDFs, as currencies such as the Argentinian peso cannot be traded on open markets like major currencies.[77]

These currency pairs, in addition to a variety of other combinations, account for over 95% of all speculative trading in the forex market. However, you will probably have noticed the US dollar is prevalent in the major currency pairings. This is because it’s the world’s leading reserve currency, playing a part in approximately 88% of currency trades.
In particular, you should look for a Forex broker that has a major presence in your country or, at a minimum, offers phone and email support in your language. A broker with an efficient customer enquiry and complaints procedure will ensure that if an enquiry is filed by a Forex trader and cannot be resolved within a few hours, it is immediately forwarded to the customer support desk or compliance department.
"Buy the rumor, sell the fact": This market truism can apply to many currency situations. It is the tendency for the price of a currency to reflect the impact of a particular action before it occurs and, when the anticipated event comes to pass, react in exactly the opposite direction. This may also be referred to as a market being "oversold" or "overbought".[75] To buy the rumor or sell the fact can also be an example of the cognitive bias known as anchoring, when investors focus too much on the relevance of outside events to currency prices.
Forex trading beginners in particular, may be interested in the tutorials offered by a brand. These can be in the form of e-books, pdf documents, live webinars, expert advisors (ea), courses or a full academy program – whatever the source, it is worth judging the quality before opening an account. Bear in mind forex companies want you to trade, so will encourage trading frequently.
Swing trading: Swing trading is a medium-term trading approach that focuses on larger price movements than scalping or intraday trading. This means that traders can set up a trade and check in on it within a few hours, or a few days, rather than having to constantly sit in front of their trading platform, making it a good option for people trading alongside a day job.
Finally, consider whether the Forex broker offers education and support. Ongoing education is essential to a Forex trader's development and achieving the best results. This is why Admiral Markets offers a range of free articles and tutorials, webinars and online courses, including Forex 101 and Zero to Hero. In addition to educational content and materials, it's also important to consider the availability of support, so you can get your questions answered, and any potential issues dealt with.
As traders, we can take advantage of the high leverage and volatility of the Forex market by learning and mastering and effective Forex trading strategy, building an effective trading plan around that strategy, and following it with ice-cold discipline. Money management is key here; leverage is a double-edged sword and can make you a lot of money fast or lose you a lot of money fast. The key to money management in Forex trading is to always know the exact dollar amount you have at risk before entering a trade and be TOTALLY OK with losing that amount of money, because any one trade could be a loser. More on money management later in the course.

For traders—especially those with limited funds—day trading or swing trading in small amounts is easier in the forex market than other markets. For those with longer-term horizons and larger funds, long-term fundamentals-based trading or a carry trade can be profitable. A focus on understanding the macroeconomic fundamentals driving currency values and experience with technical analysis will help new forex traders to become more profitable.
Live Spreads Widget: Dynamic live spreads are available on Active Trader commission-based accounts. When static spreads are displayed, the figures are time-weighted averages derived from tradable prices at FXCM from April 1, 2019 to June 30, 2019. Spreads are variable and are subject to delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.
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.
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.
Analysis is absolutely vital to trading. Charts are helpful for both short and long-term trading. You should be looking at daily, weekly, and monthly charts. Fortunately, there are a number of different approaches to Forex analysis, which means every trader can find the right approach for them. The three broad categories of Forex analysis are fundamental analysis, technical analysis and wave analysis.
Knowing how the industry is mapped out is important, because the collective combination of all participants creates the market you trade in. The relative weight of the trading party to the market is measured by how much money that party manages – from billion dollar hedge funds and investment banks, to private traders with a few thousand dollars in action.
The main trading centers are London and New York City, though Tokyo, Hong Kong, and Singapore are all important centers as well. Banks throughout the world participate. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session.
OANDA (Canada) Corporation ULC accounts are available to anyone with a Canadian bank account. OANDA (Canada) Corporation ULC is regulated by the Investment Industry Regulatory Organization of Canada (IIROC), which includes IIROC's online advisor check database (IIROC AdvisorReport), and customer accounts are protected by the Canadian Investor Protection Fund within specified limits. A brochure describing the nature and limits of coverage is available upon request or at www.cipf.ca.
Stay calm: As exciting as trading can be, it is still stressful work. There will be a lot of setbacks on your way to the top. Emotions can force your hand to open a trade too early and/or close it too late. The main cause of stress for beginners in trading is the fact that some Forex trades will end in loss no matter what – it's just the way the market is. Just remember that war is not won with a single battle. Rather, it is overall performance that counts.

Investors should stick to the major and minor pairs in the beginning. This is because it will be easier to find trades, and lower spreads, making scalping viable. Exotic pairs, however, have much more illiquidity and higher spreads. In fact, because they are riskier, you can make serious cash with exotic pairs, just be prepared to lose big in a single session too.
A spot transaction is a two-day delivery transaction (except in the case of trades between the US dollar, Canadian dollar, Turkish lira, euro and Russian ruble, which settle the next business day), as opposed to the futures contracts, which are usually three months. This trade represents a “direct exchange” between two currencies, has the shortest time frame, involves cash rather than a contract, and interest is not included in the agreed-upon transaction. Spot trading is one of the most common types of forex trading. Often, a forex broker will charge a small fee to the client to roll-over the expiring transaction into a new identical transaction for a continuation of the trade. This roll-over fee is known as the "swap" fee.
One way to deal with the foreign exchange risk is to engage in a forward transaction. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then. The duration of the trade can be one day, a few days, months or years. Usually the date is decided by both parties. Then the forward contract is negotiated and agreed upon by both parties.
Spot for most currencies is two business days; the major exception is the U.S. dollar versus the Canadian dollar, which settles on the next business day. Other pairs settle in two business days. During periods that have multiple holidays, such as Easter or Christmas, spot transactions can take as long as six days to settle. The price is established on the trade date, but money is exchanged on the value date.
Some may argue that Forex day trading is a field that should be left for the people that have great experience, and who can get fully immersed in the activity. Others say that day trading is the best way to make money in the least possible time, and therefore is the best type of trading as a result of this. Whatever the case may be, day trading is the field in which both pros and cons occur. While this type of trading is gaining popularity with each passing day, it is only effective for the people who are eager to commit a lot in order to succeed at it.

Traders can also make short trades (also known as sell trades), where they sell a Forex CFD at the ask price and, once the price drops, buy it at a lower bid price, and profit on the difference. In this case, if the GBP/USD ask price was 1.32265, and the trade closed at the price of 1.31203, the difference would be 0.01062, or 106.2 pips (which would amount to 1,062 USD in profit).
Many people question what a trader’s salary is. However, the truth is it varies hugely. The majority of people will struggle to turn a profit and eventually give up. On the other hand, a small minority prove not only that it is possible to turn a profit, but that you can also make huge returns. So it is possible to make money trading forex, but there are no guarantees. 75-80% of retail traders lose money.
OANDA doesn’t provide any products to American investors besides forex. In some ways, the clarity and concentration of a forex focus is ideal for all types of forex investors. The inexperienced can set their sights on mastering one corner of the market. The seasoned can take advantage of a trading platform that’s designed to manage nothing but forex. That said, if being able to diversify your interests while staying within the same brokerage is important to you, check out thinkorswim or Ally Invest.

As traders, we can take advantage of the high leverage and volatility of the Forex market by learning and mastering and effective Forex trading strategy, building an effective trading plan around that strategy, and following it with ice-cold discipline. Money management is key here; leverage is a double-edged sword and can make you a lot of money fast or lose you a lot of money fast. The key to money management in Forex trading is to always know the exact dollar amount you have at risk before entering a trade and be TOTALLY OK with losing that amount of money, because any one trade could be a loser. More on money management later in the course.


Trading in South Africa might be safest with an FSA regulated (or registered) brand. The regions classed as ‘unregulated’ by European brokers see way less ‘default’ protection. So a local regulator can give additional confidence. This is similar in Singapore, the Philippines or Hong Kong. The choice of ‘best forex broker’ will therefore differ region by region.

Stay calm: As exciting as trading can be, it is still stressful work. There will be a lot of setbacks on your way to the top. Emotions can force your hand to open a trade too early and/or close it too late. The main cause of stress for beginners in trading is the fact that some Forex trades will end in loss no matter what – it's just the way the market is. Just remember that war is not won with a single battle. Rather, it is overall performance that counts.
By shorting €100,000, the trader took in $115,000 for the short-sale. When the euro fell, and the trader covered their short, it cost the trader only $110,000 to repurchase the currency. The difference between the money received on the short-sale and the buy to cover is the profit. Had the euro strengthened versus the dollar, it would have resulted in a loss.
At the end of 1913, nearly half of the world's foreign exchange was conducted using the pound sterling.[24] The number of foreign banks operating within the boundaries of London increased from 3 in 1860, to 71 in 1913. In 1902, there were just two London foreign exchange brokers.[25] At the start of the 20th century, trades in currencies was most active in Paris, New York City and Berlin; Britain remained largely uninvolved until 1914. Between 1919 and 1922, the number of foreign exchange brokers in London increased to 17; and in 1924, there were 40 firms operating for the purposes of exchange.[26]
Before you make your first trade, it's important to consider how to effectively manage your risk in the Forex market. As we've already discussed, trading Forex CFDs gives you the opportunity to trade using leverage, meaning you can use a relatively small deposit to access a larger portion of the market (up to 500 times the value of your account balance, if you're a Professional client). This then multiplies your potential profits to the same extent. However, it also multiplies your potential losses.
Despite being able to trade 24 hours a day, 5 days a week, you shouldn’t (Forex trading is not quite 24.7). You should only trade a forex pair when it’s active, and when you’ve got enough volume. Trading forex at weekends will see small volume. Take GBP/USD for example, there are specific hours where you have enough volatility to create profits that are likely to negate the bid price spread and commission costs.

Whether you are a beginner trader or a pro, it is best to trade with what you see and not what you think. For example, you might think that the US dollar is overvalued and has been overvalued for too long. Naturally, you will want to short and you might be right eventually. But if the price is moving up, it does not matter what you think. In fact, it doesn't matter what anybody thinks – the price is moving up and you should be trading with the trend.

Due to Forex CFDs being leveraged, traders can access large portions of the currency market at a very low margin - sometimes as low as 1/500th of the size of the market they want to access (based on a leverage rate of 1:500). There are few additional costs as well - most Forex trading accounts have little (or no) commissions, order fees, and account management fees. If there are any trading fees, these are usually a markup the broker has added to the spread.
Knowing how the industry is mapped out is important, because the collective combination of all participants creates the market you trade in. The relative weight of the trading party to the market is measured by how much money that party manages – from billion dollar hedge funds and investment banks, to private traders with a few thousand dollars in action.

There are two main types of retail FX brokers offering the opportunity for speculative currency trading: brokers and dealers or market makers. Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or "mark-up" in addition to the price obtained in the market. Dealers or market makers, by contrast, typically act as principals in the transaction versus the retail customer, and quote a price they are willing to deal at.
For traders—especially those with limited funds—day trading or swing trading in small amounts is easier in the forex market than other markets. For those with longer-term horizons and larger funds, long-term fundamentals-based trading or a carry trade can be profitable. A focus on understanding the macroeconomic fundamentals driving currency values and experience with technical analysis will help new forex traders to become more profitable.
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