How Does Forex Trading Work?

The forex or foreign exchange market is different to global stock markets as it is open 24 hours a day, 5 days a week. Though the local stock market is more familiar to most people, the foreign exchange market is the largest, most liquid and actively traded market in the world. Combined with extended opening hours vs local stock markets, this means there are almost endless opportunities in the forex market.

What is Hedging in Forex?

Hedging is a hot topic for newcomers to the forex market and if used correctly, can be a great way of mitigating your risk and improving consistency. So what is forex hedging? Well, hedging refers to opening up an offsetting position in the market to temporarily cover an existing position that has either gone against you or may turn against you. This could be on the same currency pair, or on another highly correlated pair.

What is Swap in Forex?

A forex swap is a daily interest charge that is either billed or credited to you at the start of each new trading day if you are holding positions from the day before. Swap charges can add up over time, affecting the profitability of your positions, so it’s important you understand how they work and factor them into your decision-making when planning your attack on the market.

How to Start Forex Trading?

The foreign exchange or forex market is the largest and most liquid market in the world, with trillions of dollars changing hands each and every day. Before starting out on your forex trading journey, it’s important to get a little background on the knowledge on the market and how it all works.

What is Leverage in Forex?

Leverage is an integral tool in every forex trader’s arsenal. Traders are attracted to the forex market due to its inherently low volatility and the ability to magnify that volatility as necessary using leverage. Leverage is trading with borrowed capital, allowing a trader with a relatively small account balance to open up much larger positions than they would otherwise be able to. For example, using leverage, a trader with just $1000 USD of capital could open up a $10 000 USD position and potentially generate 10 times as much profit if the market moves in their favour. As the forex market generally moves less than 1% per day, leverage is essential to generating significant trading results.

What is Margin in Forex?

Margin is the collateral you deposit with your broker in order to open up leveraged positions. The amount of margin in your account and the amount of leverage your broker offers will determine how much your broker will lend to you and the size of positions you can open. It’s important to understand that margin is not a cost or fee, once you close your leveraged trading position, your margin is returned to you, adjusted for any profits or losses, and can be freely withdrawn. This margin deposit just ensures you have enough capital reserved to cover your losses if your leveraged trade moves against you. As the forex market isn’t very volatile, margin trading is essentially the only way you can turn a reasonable profit, so it’s important to understand how margin works before diving into your trading journey.

Market Insight Commentary – 21 February 2018

Market Outlook Commentary – 21 March 2019

The FOMC has come and gone, as expected the rates were left on hold – and as expected the committee was somewhat more dovish. The Fed are looking for only a single rise in 2020 and nothing for the rest of the year. Growth was cut to 2.1% and 1.9% over the same period but they did hint that the economy was in a good place.

Market Insight Commentary – 11 September 2018

The EURUSD dipped to 1.1525 but steadily climbed after those announcements, it seems as though both the EURUSD and GBPUSD will be affected by these headlines in the short term. Despite the positive sentiment – both Australia and New Zealand could not take advantage. The USDCAD had two attempts at 1.3200 and was in the process of a third when New York opened, this pair is still going to be concerned on NAFTA.

Market Insight Commentary – 25 April 2018

The big FX mover yesterday was in the FX market was thus the USDJPY, the JPY pairs were the higher earlier but started wilting with stocks. This pair is most affected by the equity markets and so this is something that we will have to watch.