Introduction To Forex

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Introduction To Forex

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Introduction To Forex

Introduction to Best Forex Trading Platform

The foreign exchange market, also known as the FX or Forex market, is the largest and most traded financial market in the world. The FX market has grown to a daily trade volume of over $5 trillion a day which is over 200 times bigger than the New York Stock Exchange. Historically, the major players in the FX market were large central banks, multinational firms and big financial institutions. While these organizations are still the major players in the market, the growth of online brokers and technology has made it possible for individual retail traders to access this market and trade on a level playing field with the big players.

Types Of currency Pairs

In each Currency Pair there is a Base Currency and a Secondary one. The prices as well as the charts on a currency pair usually refer to the Base currency. Example. If you read somewhere that the EUR/USD is getting stronger, it means that the EUR is getting stronger against the USD. If you look at the EUR/USD chart, it shows an upward trend which means that the EUR is getting stronger over the USD. There are 3 categories of currency pairs: the Major currencies, the Crosses and the Exotic.

Majors

Majors are the most traded currency pairs in the Market. These pairs are listed below:

EUR/USD
GBP/USD
USD/JPY
USD/CHF
USD/CAD
AUD/USD
NZD/USD

Crosses

The Crosses are the currencies that are traded against each other and do not include the USD. An example of the cross currency pairs is GBP/JPY and EUR/GBP.

Exotic

Exotic Currencies are the ones that are traded in very low volumes and they lack market depth. The Mexican Peso and the South African Rand are examples of the Exotic Currencies.

Bid And ask / Spread ??

In every currency table you will find quotes that refer to the currency pairs. The quotes (prices) always refer to the Base currency in the pair. Bid is the selling price of the Base Currency and Ask is the buying price of the Base currency. Example: If you would like to buy 1 Euro, you would buy it at the Ask price and if you would like to sell 1 Euro, you would have to sell it at the Bid Price.

For every 1 Euro we want to sell, we will use the Bid price or the selling price, expressed in U.S. Dollars. Thus, 1 Euro to sell is worth 1.4000 USD. When opening a trade, either to buy or to sell, it is usually referred to as a position. An open position indicates that the client has positioned himself in the market. A closed position indicates that the client exited the market. A LONG position is when you are buying and a SHORT position is when you are selling a currency. When a currency is moving up, it is also referred to as Bullish; if a currency is dropping then the movement is Bearish.

Spreads

The Spread is the difference between the Bid and the Ask price. The spread is the commission charged by the broker for using their services and it is measured in Pips.

Pips

The smallest movement in the price of a currency is calculated in pips. The pip is the 4th digit, after the decimal point in the price of a currency.

Understanding Lot Sizes

Historically, Currencies were traded in specific amounts called lots. The standard size for a lot is 100,000 units. There are also mini-lots of 10,000 and micro-lots of 1,000.

To take advantage of relatively small moves in the exchange rates of currency, we need to trade large amounts in order to see any significant profit (or loss).

Lots	No. of Units
Standard	100000
Mini	10000
Micro	1000
Nano	100

Margin / Leverage

Margin : Margin is usually calculated in percentage and it is the amount you are opening positions with by using leverage.

Leverage : Trading with leverage allows traders to enter markets that would be otherwise restricted based on their account size. Leverage allows traders to open positions for more lots, more contracts, more shares etc. than they would otherwise be able to afford.

Rollover / Swap

Rollover / SWAP are calculated when a trade is kept open overnight. A cost or income will be calculated via the overnight interest rate differential between the two currencies pending on long/short open positions. Calculations take place at 23:59 GMT will be shown on client account statements by the next trading day.

RISK WARNING

An investment in derivatives may mean investors may lose an amount even greater than their original investment. Anyone wishing to invest in any of the products mentioned in www.wolfxmarkets.com should seek their own financial or professional advice. Trading of securities, forex, stock market, commodities, options and futures may not be suitable for everyone and involves the risk of losing part or all of your money. Trading in the financial markets has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. Don't invest and trade with money which you can't afford to lose. Forex Trading are not allowed in some countries, before investing your money, make sure whether your country is allowing this or not. You are strongly advised to obtain independent financial, legal and tax advice before proceeding with any currency or spot metals trade. Nothing in this site should be read or construed as constituting advice on the part of Wolfx Markets or any of its affiliates, directors, officers or employees.

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