Q: What is Foreign Exchange Trading; what do I need to know?
A: Discover Forex trading in our Learn section. This is where you will find a series of articles that explain currency trading and the foreign exchange market.
Q: What is Forex?
A: Forex and ‘FX’ are shortened terms used for ‘foreign exchange’. Foreign exchange or ‘currency trading’ is the exchange of money from different countries. The value of one country’s currency is constantly changing against the value of another country’s currency. Forex traders make money through buying and selling currencies on the foreign exchange market.
Q: What is Over The Counter (OTC) trading?
A: A market conducted directly between dealers and principals via a telephone and computer network rather than a regulated exchange trading floor. OTC trading with Easy-Forex® means that you trade currencies with the aim to earn a profit, though you can lose as well. You don’t actually take delivery of these currencies.
Q: What are Forex Instruments?
A: Forex Instruments are the products or ways of trading in foreign exchange. Easy-Forex® offers Day Trading, Limit Orders and in some regions also Forward deals.
Q: What is Day Trading at Easy-Forex®?
A: Day Trading deals are usually opened and closed on the same day. It is possible for a day trading deal to last longer than one day. When this happens, the deal is automatically renewed at 22:00 GMT each night until the deal closes. Day trading is becoming more popular now that more people use the Internet. As long as the deal is open you will be charged a renewal fee every night at 22:00 GMT for all deals that are still open. If you have insufficient funds in your account your credit card may be charged or the deal closed – refer to section 22 in the Terms and Conditions regarding this issue.
Q: What is a Forward deal?
A: A forward deal is a contract where the buyer and seller agree to buy or sell an asset or currency at a spot rate for a specified date in the future (usually up to 60 days). Forward contracts are conducted as a way to cover (hedge) future movements in exchange rates. Margin spreads are higher than in Day Trading but no renewal fees are charged. Forward deals with Easy-Forex® are only offered in some world regions.
Q: What is Day Trading at Easy-Forex®?
A: Day Trading deals are usually opened and closed on the same day. It is possible for a day trading deal to last longer than one day. When this happens, the deal is automatically renewed at 22:00 GMT each night until the deal closes. Day trading is becoming more popular now that more people use the Internet. As long as the deal is open you will be charged a renewal fee every night at 22:00 GMT for all deals that are still open. If you have insufficient funds in your account your credit card may be charged or the deal closed – refer to section 22 in the Terms and Conditions regarding this issue.
Q: What is a Forward deal?
A: A forward deal is a contract where the buyer and seller agree to buy or sell an asset or currency at a spot rate for a specified date in the future (usually up to 60 days). Forward contracts are conducted as a way to cover (hedge) future movements in exchange rates. Margin spreads are higher than in Day Trading but no renewal fees are charged. Forward deals with Easy-Forex® are only offered in some world regions.
Q: What is a Limit Order?
A: A limit order is where you nominate a rate at which you want to open a deal. When and if this rate occurs in the market, your ‘reserved’ deal is automatically opened. Once the deal is opened it is treated like a Day Trade with the details appearing in My Account. Easy-Forex® does not charge for this service. This saves you watching the market every minute to see whether the rate you want happens.
Q: How do I know which currency will go up or down?
A: International currency prices are highly volatile and very difficult to predict. Due to such volatility, there is no system that can assure you that transactions on the foreign currency market should result in great benefits to you, nor is it possible to guarantee that your transactions would yield favorable results.
Q: Why has the price of the deals I am interested in changed since the last time I checked?
A: Easy-Forex® deals are dependent on the FX market, which is dynamic and changes all the time. The fluctuations in the market, in currency rates, and in other parameters, affect our fully automated pricing engine. This is why rates and premiums may change all the time. For your convenience, we developed the currency rates table which displays market data in real time and can give you an indication as to whether the rates are going up or down. When the rates in the bar are green it means they went up since the last update, when they are red it means they went down since the last update.
Q: What currencies can I trade with Easy-Forex®?
A: Easy-Forex® offers all major currency pairs for trading as well as exotics and gold and silver in some regions. To see what is available in your region go to Currency Rates Matrix.
Q: Is the Forex market regulated?
A: Yes, in many world regions Forex is regulated (though not all regions). Easy-Forex® Group holds licenses in:
Australia: ASIC AFSL 246566
Europe: CySEC 079/07
US CFTC registered; NFA member 0358754
Q: Is Forex risky?
A: Yes, we advise all our clients that foreign exchange trading does involve substantial amount of risk. With Easy-Forex® you cannot lose more than your ‘margin’, the money you are prepared to risk plus the daily rolling fee if you have entered a Day Trade transaction. Profits are unlimited but you can never lose more than what you initially risked. However, risk only what you can afford. Before you join you need to read our Disclaimer and Terms and Conditions.
Q: What should I look for in an online trading platform?
A: There are many online platforms available to trade with. Go to Trading Features to see what the Easy-Forex® platform offers at glance. Some key points to look for in the platform you choose:
level of personal service and support – live chat, SMS services
personal training
trading tools offered including charts, outlooks, news, financial calendars
ease of platform – can you do everything online or do you need to download software
how quickly can you can start trading
easy deposit methods – e.g. e-wallets such as PayPal, credit cards, Wire Transfers
24 hour access to your account
leverage offered
tailor-made accounts and spreads
real-time exchange rates
no hidden costs – commissions on deposits or withdrawals
no maintenance margins
cost of renewal/rolling fees for Day Trades
guaranteed rates and stop loss limits
security and safety of the site and your information
a company that has a regulatory license for your region
genuine company with real people in real offices around the world.
Q: What type of account is suitable for me?
A: Easy-Forex® has four account types with different margin levels and spreads involved. For frequent traders tailor-made accounts are also available. You can speak to your Easy-Forex® Account Service Manager to help you decide which account is best for you.
Mini: $2,500 minimum deal $200 margin
Gold: $50,000 minimum deal $500 margin
Platinum: $250,000 minimum deal $5,000 margin
VIP: $500,000 minimum deal $10,000 margin Sharia (Islamic) Accounts are also available
Q: What is Sharia or Islamic Law Accounts and do you offer them?
A: Yes, Easy-Forex® offers trading accounts which adhere to the Islamic law (Sharia). With Islamic trading accounts, when traders extend their Day-Trading deals to the next day, no rolling fee is charged. Accordingly, the maximum duration offered for Day-Trading deals is limited (usually 1 week but it can also be shorter or longer depending on the currency pair traded). For more information please contact your Account Service Manager or your Personal Dealer.
Q: How do I use the Easy-Forex® website?
Q: Can I log onto the site with my existing Username and Password?
A: You can access your Easy-Forex® trading account from both the new site and the old classic site. Just enter the same username and password as you always have.
Q: What does the Easy-Forex® website contain?
A: The Guided Tours are a good way to introduce you to the site as well as learning about how to trade. The site has four sections:
Trade, this is where you conduct your trading, where you can view reports in My Position, check My Account details and set your SMS alerts;
Learn, here you will find the guided tour videos, the Info Center with articles about Forex, the glossary of commonly used terms, and you can download the eBook guide to Forex;
Trade Tools, is where you will find tools to assist you in your trading. From calendars of indicators, live news feeds, daily and weekly outlooks, charts, sms alerts, the inside viewer™ and the trade controller™;
About Us, has the information about Easy-Forex® – the team, contacts and global offices. You can read our manifesto and see our spreads. It contains the legal section with terms and conditions, and has information on how to enhance your trading activities.
Q: How do I deposit money with Easy-Forex®?
A: In the Trade section on the website you can deposit money with your credit card, PayPal, or with Wire Transfer. We accept up to 12 currencies.
Why Easy-Forex® Trading Platform?
Easy-Forex® Manifesto
We’re focused on the only person who counts.
You.
1. Forex should be easy
Forex looks difficult and complicated, only for the big boys.
We’ll make it easy and accessible, allowing anyone to be part of the big game.
2. Forex is exciting
Finance should not be boring.
We feel the excitement of forex.
We’ll bring this excitement to you.
3. It’s a competitive world.
We are devoted to creativity and constant innovation to increase benefit to you.
4. Forex is a tough game.
Truth and transparency will always guide our behavior.
We’ll hide nothing from you.
Least of all the truth.
5. Work is serious and fun.
We’re casual and approachable.
But disciplined and professional.
6. We’re always available for you.
We’re ready.
Are you ready? Go to Forex
What is Forex Trading?
The foreign exchange (Forex) market is a nonstop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders’ investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.
The main incentive of currency dealing to private investors and the attractions of short-term Forex trading are: 24-hour trading, 5 days a week, with nonstop access to global Forex dealers.
Further incentives to Forex trading:
An enormous liquid market making it easy to trade most currencies.
Volatile markets offering profit opportunities.
Standard Forex instruments for controlling risk exposure.
The ability to profit in rising or falling markets.
Leveraged trading with low margin requirements.
Many options for zero commission trading.
Forex trading
Forex trading
The investor’s goal in Forex trading is to profit from foreign currency movements. Forex trading or currency trading is always done in currency pairs. For example, the exchange rate of EUR/USD on Aug 26th, 2003 was 1.0857. This number is also referred to as a “Forex rate” or just “rate” for short. If the investor had bought 1000 euros on that date, he would have paid 1085.70 U.S. dollars. One year later, the Forex rate was 1.2083, which means that the value of the euro (the numerator of the EUR/USD ratio) increased in relation to the U.S. dollar. The investor could now sell the 1000 euros in order to receive 1208.30 dollars. Therefore, the investor would have USD 122.60 more than what he had started one year earlier. However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a “risk-free” investment. One example of a risk-free investment is long-term U.S. government bonds since there is practically no chance for a default, i.e. the U.S. government going bankrupt or being unable or unwilling to pay its debt obligation. (Please note that past performance is not indicative of future performance)
When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.
Exchange rate
Because currencies are traded in pairs and exchanged one against the other when traded, the rate at which they are exchanged is called the exchange rate. The majority of the currencies are traded against the US dollar (USD). The four next-most traded currencies are the euro (EUR), the Japanese yen (JPY), the British pound sterling (GBP) and the Swiss franc (CHF). These five currencies make up the majority of the market and are called the major currencies or “the Majors”. Some sources also include the Australian dollar (AUD) within the group of major currencies.
The first currency in the exchange pair is referred to as the base currency and the second currency as the counter or quote currency. The counter or quote currency is thus the numerator in the ratio, and the base currency is the denominator. The value of the base currency (denominator) is always 1. Therefore, the exchange rate tells a buyer how much of the counter or quote currency must be paid to obtain one unit of the base currency. The exchange rate also tells a seller how much is received in the counter or quote currency when selling one unit of the base currency. For example, an exchange rate for EUR/USD of 1.2083 specifies to the buyer of euros that 1.2083 USD must be paid to obtain 1 euro.
At any given point, time and place, if an investor buys any currency and immediately sells it – and no change in the exchange rate has occurred – the investor will lose money. The reason for this is that the bid price, which represents how much will be received in the counter or quote currency when selling one unit of the base currency, is always lower than the ask price, which represents how much must be paid in the counter or quote currency when buying one unit of the base currency. For example, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015, representing a spread of 1000 pips (also called points, one pip = 0.0001), which is very high in comparison to the bid/ask currency rates that online Forex investors commonly encounter, such as 1.2015/1.2020, with a spread of 5 pips. In general, smaller spreads are better for Forex investors since even they require a smaller movement in exchange rates in order to profit from a trade.
Most Forex dealers, including Easy Forex™, are compensated by the spreads that are embedded in the currency rates.
Margin – Amount to Risk
Banks and/or online trading providers need collateral to ensure that the investor can pay in case of a loss. The collateral is called the margin and is also known as minimum security in Forex markets. In practice, it is a deposit to the trader’s account that is intended to cover any currency trading losses in the future.
Margin enables private investors to trade in markets that have high minimum units of trading by allowing traders to hold a much larger position than their account value. Margin trading also enhances the rate of profit, but has the tendency to inflate rates of loss, on top of systemic risk.
Leveraged financing
Leveraged financing, i.e., the use of credit, such as a trade purchased on a margin, is very common in Forex. The loan/leveraged in the margined account is collateralized by your initial deposit. This may result in being able to control USD 100,000 for as little as USD 1,000. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or may have to deposit. This may work against you as well as for you. You may sustain a total loss of the margin funds deposited and any additional funds deposited to maintain your positions.
Five ways private investors can trade in Forex directly or indirectly:
The spot market
Forwards and futures
Options
Contracts for difference
Spread betting
A spot transaction
A spot transaction is a straightforward exchange of one currency for another. The spot rate is the current market price, also called the benchmark price. Spot transactions do not require immediate settlement, or payment “on the spot.” The settlement date, or “value date,” is the second business day after the “deal date” (or “trade date”) on which the transaction is agreed to by the two traders. The two-day period provides time to confirm the agreement and arrange the clearing and necessary debiting and crediting of bank accounts in various international locations.
Risks
Forex trading is risky. There are ways to reduce risk such as setting a Stop Loss on deals. Read more about the risks involved and how to lower exposure to risk.
Further reading
To learn more about the topics mentioned in the above article, also look at Day Trading, Leveraged Trading and Currency Pairs. To find out more about Forex instruments offered by Easy-Forex® read Online Forex Account.
Education is very important for us here at Lunarpages, as many of us had or have children attending public schools. It simply made sense to make Education a community project that Lunarpages could support. Our Education Program was created in 2003 and along with Ron’s family, this project is his passion! All USA Public Schools K-12 now receive as many free hosting accounts as they need, courtesy of Lunarpages Web Hosting!
0 comments:
Post a Comment
Please comment about anything concern to your own perspective.