This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
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.
Day trading can take place in any market, but is commonly referred to in the context of either the Forex trading market or the stock trading market. In order to be successful as a Forex day trader, you need to have a decent amount of capital, and a good amount of knowledge of the market behind you. However, having this doesn't necessarily guarantee success. This is especially true when 'invisible hands' are at work, and when the prices fluctuate enormously during intraday Forex trading.
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.

Being the largest, most active financial market on the globe, it is also the world's most liquid market, meaning it is easy for traders to enter into, as well as exit trades, and for the most liquid pairs, they can do so at a very low cost (even less than a single pip!). This also means that the Forex market is very volatile, creating many opportunities for traders to make a profit on both the positive and negative movements of currency pairs.
Traders at the banks would collaborate in online chat rooms. One trader would agree to build a huge position in a currency, then unload it at 4 p.m. London Time each day. That's when the WM/Reuters fix price is set. That price is based on all the trades taking place in one minute. By selling a currency during that minute, the trader could lower the fix price. That's the price used to calculate benchmarks in mutual funds. Traders at the other banks would also profit because they knew what the fix price would be.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
Second, since trades don't take place on a traditional exchange, you won't find the same fees or commissions that you would on another market. Next, there's no cut-off as to when you can and cannot trade. Because the market is open 24 hours a day, you can trade at any time of day. Finally, because it's such a liquid market, you can get in and out whenever you want and you can buy as much currency as you can afford.

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.
However, since the Forex market is a global market, it means there is always a part of the world that is awake and conducting business, and during these hours their currencies tend to experience the most movement. For example, currency pairs involving the US dollar experience the most movement during US business hours (16:00 to 24:00 GMT), while the Euro, Pound, Swiss Franc and other European currencies experience the most movement during European business hours, (8:00 and 16:00 GMT).

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.


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For the past 300 years, there has been some form of a foreign exchange market. For most of U.S. history, the only currency traders were multinational corporations that did business in many countries. They used forex markets to hedge their exposure to overseas currencies. They could do so because the U.S. dollar was fixed to the price of gold. According to the gold price history, gold was the only metal the United States used to back up the value of the nation’s paper currency.

The foreign exchange market assists international trade and investments by enabling currency conversion. For example, it permits a business in the United States to import goods from European Union member states, especially Eurozone members, and pay Euros, even though its income is in United States dollars. It also supports direct speculation and evaluation relative to the value of currencies and the carry trade speculation, based on the differential interest rate between two currencies.[2]
Forex brokers provide clients with resources to understand market activity and make fast, informed choices. These resources should include third-party research, research reports, and market commentary, alongside venues for sharing knowledge (community forums) and receiving advice and confirmation (live chat, email, and phone support). Exceptional brokers also include access to historical data, so traders can back-test strategies before allocating real money. (Experimenting with virtual trading is also a good way of getting your feet wet.) Alongside research options, we wanted to see education: opportunities to learn more about forex trading and platform navigation via articles, videos, and webinars.
Forex brokers provide leverage up to 50:1 (more in some countries). For this example, assume the trader is using 30:1 leverage, as usually that is more than enough leverage for forex day traders. Since the trader has $5,000, and leverage is 30:1, the trader is able to take positions worth up to $150,000. Risk is still based on the original $5,000; this keeps the risk limited to a small portion of the deposited capital.
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.
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the Credit market.[1]
When learning about Forex trading, many beginners tend to focus on major currency pairs because of their daily volatility and tight spreads. But there are numerous other opportunities – from exotic FX pairs, to CFD trading opportunities on stocks, commodities, energy futures, to indices. There are even indices that track groups of indices, and you can trade them as well.
This free Forex mini-course is designed to teach you the basics of the Forex market and Forex trading in a non-boring way. I know you can find this information elsewhere on the web, but let’s face it; most of it is scattered and pretty dry to read. I will try to make this tutorial as fun as possible so that you can learn about Forex trading and have a good time doing it.
It should be noted that there is no central marketplace for the Forex market; trading is instead said to be conducted ‘over the counter’; it’s not like stocks where there is a central marketplace with all orders processed like the NYSE. Forex is a product quoted by all the major banks, and not all banks will have the exact same price. Now, the broker platforms take all theses feeds from the different banks and the quotes we see from our broker are an approximate average of them. It’s the broker who is effectively transacting the trade and taking the other side of it…they ‘make the market’ for you. When you buy a currency pair…your broker is selling it to you, not ‘another trader’.
Major Currency — currencies from the world’s most developed economies including Europe, Japan, Canada, and Australia — represent the most heavily traded and liquid currency markets for any forex trader. A major currency pair is created when one of these currencies is traded against the U.S. dollar. Examples include Euro vs. the U.S. Dollar (EUR/USD) and the U.S. Dollar vs. the Canadian Dollar (USD/CAD). Their availability on a forex brokerage is essential.
Currencies are traded as pairs, and the movement of currency pairs measure the value of one currency against another. For instance, the EURUSD currency pair measures the value of the Euro against the US dollar. When the value of the pair increases, this means the value of the Euro has increased against the value of the US dollar. When the value of the pair decreases, this means the value of the US dollar has increased (or the value of the Euro has fallen).
U.S. President, Richard Nixon is credited with ending the Bretton Woods Accord and fixed rates of exchange, eventually resulting in a free-floating currency system. After the Accord ended in 1971,[31] the Smithsonian Agreement allowed rates to fluctuate by up to ±2%. In 1961–62, the volume of foreign operations by the U.S. Federal Reserve was relatively low.[32][33] Those involved in controlling exchange rates found the boundaries of the Agreement were not realistic and so ceased this[clarification needed] in March 1973, when sometime afterward[clarification needed] none of the major currencies were maintained with a capacity for conversion to gold[clarification needed], organizations relied instead on reserves of currency.[34][35] From 1970 to 1973, the volume of trading in the market increased three-fold.[36][37][38] At some time (according to Gandolfo during February–March 1973) some of the markets were "split", and a two-tier currency market[clarification needed] was subsequently introduced, with dual currency rates. This was abolished in March 1974.[39][40][41]
Currency futures contracts are contracts specifying a standard volume of a particular currency to be exchanged on a specific settlement date. Thus the currency futures contracts are similar to forward contracts in terms of their obligation, but differ from forward contracts in the way they are traded. In addition, Futures are daily settled removing credit risk that exist in Forwards.[78] They are commonly used by MNCs to hedge their currency positions. In addition they are traded by speculators who hope to capitalize on their expectations of exchange rate movements.
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.
Big news comes in and then the market starts to spike or plummets rapidly. At this point it may be tempting to jump on the easy-money train, however, doing so without a disciplined trading plan behind you can be just as damaging as gambling before the news comes out. This is because illiquidity and sharp price movements mean a trade can quickly translate into significant losses as large swings take place or ‘whipsaw’.
Cross Currency Pairs signifies secondary currencies traded against each other and not against the U.S. dollar. Examples include Euro vs. the Japanese Yen (EUR/JPY) or the British Pound vs. Swiss Franc (GBP/CHF). Most reputable brokers offer this category of trades, and it’s especially important for a forex trading account denominated in a currency other than the U.S. dollar, or for more advanced traders capitalizing on discrepancies between other economies.

In a currency pair with a wider spread, such as the EURCZK, the currency will need to make a larger movement in order for the trade to become profitable. At the time of writing, the bid price for this pair is 25.4373, while the ask price is 25.4124, so the spread is 0.0200, or 20 pips. It's also not uncommon for this currency pair to have movements of less than 20 pips a day, meaning traders will likely need to perform a multi-day trade to make a profit.


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]

Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well.
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