It is very simple. You can do it by clicking on the following link: https://www.axiory.com/register/
For personal live accounts, we require 2 documents to prove your identity (colored scans), plus a proof of residence document which are no older than 6 months (PDF of your bank statement, print screens are not acceptable).
Yes, Forex can also be a passive income thanks to modern technology. The way traders usually do it is hiring people that do the trading for them (usually a personal broker), or install some software.
Now, this does indeed take the time out of trading and turns it into a passive income, but it’s also very slow and not very profitable.
But how much money do Forex traders make on passive mode? The answer is very little, even less than 1%. And that number usually does not change no matter how many or large trades the software makes.
Yes and no. CFDs have quite a lot of advantages over regular assets, but they also have disadvantages. For example, you can trade stocks on margin which can bring quite a lot of payouts, but you can’t hold a single position for too long because there are deadlines. Postponing those deadlines can get very expensive.
Yes, regardless of what types of orders Forex has and the features they introduce, everything associated with trading is extremely risky. With order types, there’s always a risk that you may not understand it completely and place the wrong order at the wrong time. This has a risk of leading to more losses than if you had done nothing at all. It is all about knowing what these order types do, and when they are most useful to use.
The minimum deposit for new clients is 100 USD.
Yes, anyone can influence the price of something on the market, but you will have to trade a lot to do so. Most likely, much more than you actually have available.
It’s important to remember that the markets are a global thing, meaning that there are trillions of dollars being spent on it every single day. Sure you may participate in the change of an item’s price, but changing it yourself is almost impossible.
What does financial market mean to you, may be completely different as to what it means for a large corporation that is trading with billions of dollars every day.
Financial markets are primarily traded on from home. Many people have an illusion that there’s this huge room with a lot of people calling their orders and somebody writing them down or putting it inside a computer.
No, modern financial markets are traded on from home or pretty much anywhere where there’s an internet connection.
All you need is a smartphone, laptop or tablet.
Why do we need financial markets if they’re not inclusive for everybody? The modern IT engineers did a great job transferring the markets from a building to a server, thus making it a lot more comfortable for everybody.
Of course, the perfect skill on how to take profits in trading is to always keep an eye on how things are progressing.
For example, if you have a take profit order for EUR/USD with a 10% profit in mind, you’d be pretty okay with keeping it like that, right? But what if you heard news that banks are starting to increase the interest rate on USD? This would technically mean that the USD is going to depreciate, but the exchange rate of the EUR/USD is going to increase. You’d want to cancel your take profit order, right?
Both canceling, and increasing/decreasing your take profit and stop loss orders are possible.
Yes. Some traders that have a much larger account would usually get better deals on their spreads.
For example, if the regular account has a spread of 3 pips on EUR/USD, a higher level account would have 1 pip spread. This is an advantage for the broker because they keep the high-level trader. What is spread in Forex but a way to generate income for the brokers?
It’s very hard to reach a high level account status though as it needs lots of trading volume. So whoever has that better spread condition definitely earned it.
Trading Forex for profit is the main reason why people engage in this field of financial activity. And there are certain things that need to be taken into account if a person wants to get real payouts from it.
Many successful traders suggest that people who are serious about Forex get an education first, learn the basic elements and mechanisms of Forex trading and then get to the trading part. This way, they won’t make as many mistakes that would put them in a bad financial situation.
Another important thing to keep in mind is that trading Forex for a considerable size of payout requires large account sizes as well. For instance, if a trader wants to get around $2,000 a month from trading, they would probably need to open up an account of around $200,000-$500,000. That’s because, usually, traders can withdraw about 1%-3% from their accounts to actually spend it.
And finally, taking things slow, increasing the trading size step by step, tends to be a sustainable strategy towards a successful Forex trading.
Your choice of a financial market will mostly depend on your own likes and dislikes. For example, people who pay a lot of attention to the news from the government tend to choose Bonds.
People who are fans of something very specific tend to go for stocks because they can buy shares of companies involved with this specific item.
People who have worked in finance or generally like to pay attention to global news about economics or something related are usually found trading in the Forex markets.
This goes on and on, but none of it is something you’re forced to do. For example, if you like listening to news about government projects, that doesn’t mean you’re forced to trade only bonds. No, you can trade whatever you want. What are financial markets if not a very flexible habit?
What you choose to trade can be based on what you feel most comfortable trading.
Yes. It’s possible to have negative equity and balance in Forex, especially if you’re not paying attention to your trades.
This happens when an open trade starts losing so much that your margin held starts using your available margin to somehow stay open. That’s right, the trade is programmed to stay open as long as possible before the trader simply indicates for it to close.
Naturally, the broker may stop it themselves if there is leverage or any other resource being used. But if it’s on its own, then there is a large chance the broker won’t touch it.
The best way to avoid negative equity is to always have stop-loss orders. This will basically tell the system that once losses reach a certain amount, the trade needs to be closed.
Yes, you may have both market and limit orders open at the same time and trigger the OCO order while you’re at it. In fact, the OCO order is designed for multiple orders.
Many seasoned traders prefer having multiple orders open at the same time as well. This mostly includes stop-loss and take-profit orders but other advanced types are used sometimes as well.
Service providers are usually chosen based on taste and preferences. However, most people tend to pay a lot of attention to a company’s license. If they don’t have it, it could mean that they were not found worthy of one by the local government. In most cases, this is a sign that you should start searching for another one.
Other ways include looking at how many software systems they have for their customers, how much general market information they provide, what their previous customer score is and etc.
But no matter how the company may look on the surface, it’s still up to your preference as a trader if you want to start trading with them.
Research is done by gathering information. People sometimes call it news Forex trading because it relies on fresh news so much.
What people tend to do is visit various websites that talk about the Forex industry. They look at the fresh news and try to determine what could happen in the market based on a new event in the world.
The news can be political, it could be about economics, or it could be in no way connected to the Forex market. It’s up to you to determine if this specific event could have influence over your currency pairs. This is mostly done by analyzing what has happened in the past with the same event, and what is being planned for the future.
Or you could simply analyze what the majority of the market will believe, and follow that trend.
Yes. Most brokers mention the maximum leverage they have available, which means that you can lower it whenever you want, or disable it completely to lower your risk when trading CFDs. If you are a beginner, most people would suggest disabling it in the beginning before you learn how it works and why it is even included in your software.
No. Both stop loss and take profit orders are completely free and do not require any payments. In fact, if stop loss take profit had a price it would be much worse for the brokers themselves.
So no, don’t worry about paying anything for these orders, they’re such essential tools that companies wouldn’t dare put a price on them unless there was something else involved.
The financial markets are pretty much large offices with a lot of people looking at dozens of computer screens. It’s a large server where traders send their orders from software installed on their own personal computers.
The advanced technology of the markets then registers their order and gives them what they asked for.
The process is very simple and usually consists of 4 steps:
This is a pattern that you will likely follow when starting to trade on the financial markets. It doesn’t matter which one you choose - stocks, Forex, commodities or something else. The process is the same everywhere.
Learning Forex trading is very subjective and varies from one trader to another. It also varies in terms of time spent on it. There are people who read up on various materials, be it online or hard printed, in a day and master all the crucial elements of Forex.
But sometimes, people tend to take their time and go easy on it. What is the easy way to learn Forex trading for them? Some of them enroll in the universities to get a degree in economics and that, depending on which degree one is aiming towards, can stretch out from two to four years.
There are also those people who spend no time on theoretical knowledge and go straight with the Forex trading. And for them, it’s all about how easy they can master all the characteristics of foreign exchange and currencies. So, learning Forex can take days, months, or even years, depending on which method one chooses and how they can process new information.
Forex is probably the most active market that uses leverage. However, it doesn’t mean that traders always have to use this tool or use it at its maximum ratio.
Certain trading strategies require different leverage sizes. For example, those traders who prefer short-term operations usually employ higher leverage because it makes the slightest changes in currency price much more significant.
On the other hand, those traders who hold their positions for a longer period of time, would want to use lower leverage rates. These traders expect drastic developments on the market and wait until the price reaches the expected level. But with leverage, they would stand before the risk of losing all their funds because of the short-term price falls.
And if someone wants to completely avoid using the leverage, it’s completely possible. Nobody forces them to increase their deposits and make possible gains, as well as losses, larger.
While ECN Forex brokers offer some of the most convenient trading conditions like instant confirmation, smaller bid-ask spreads, and direct connection to the liquidity providers, they have their own share of disadvantages as well.
One of the biggest disadvantages is that traders are required to make larger initial deposits. This means that the service is very costly and not many people would want to use it right after they start trading.
Another disadvantage that comes with the larger financial requirements is the fact that ECN brokers don’t allow traders to make micro-lots. As you may remember, micro-lot is worth 1,000 currency units and is considered the smallest position size in trading. And since ECN accounts are expensive, micro-lots aren’t offered under this service.
Although it may seem that the Forex profit/non-profit ratio is 1/1, so there’s always an unprofitable trader for every profitable one, the reality is completely different. In fact, the most likely number is that 80-90% of traders are not profitable, while 10-20% are.
This is further complicated by how much each of these traders deposits. For example, the people who are profitable would generally profit quite a lot because they trade a lot, while those who aren’t profitable would not lose too much.
Jumio verification is an added layer of security in accordance with newest regulation directives which uses ID documents to ensure our transactions with clients are genuine.
This verification is part of each registration and takes place at the end of the process.
Step-by-step instructions are presented on how to scan and upload client IDs or passport documents These scanned copies need to be clearly readable.
Slippage may occur in certain cases. To gain a better understanding of how often this happens, please see the following statistics page where we publish monthly data.
Every Forex professional has his or her budget for trading on the market. Depending on how much they dedicate and considering that they do this as a full-time job, it’s likely for a professional’s average income to be around 10-20% of what they have to trade with. Sometimes they could simply get lucky and make 100% of their capital in a single day. It’s very diverse.
Another important thing to note is that many professional Forex traders work in large corporations. So, in reality, they don’t really make anything besides their salaries.
Technically it does. If you don’t have enough equity, you can’t open a new trade simply because your balance will not allow it. The more equity you have the more trades you can have open, which means the more profits you can generate.
Equity in Forex is basically what helps you grow as a trader, increase the number of trades you have open and how much profits you generate as a whole. Without it, it would be impossible to trade at all.
There are only two ways you can increase the trading volume. Either open larger trades that will require a larger deposit, or use the maximum leverage available.
Leverage is basically funds borrowed from the Forex broker. Most volume Forex trading strategies revolve around leverage actually. Imagine that you are using $100 for the trade, and the broker has a leverage of 1:100. If you use it, your trade will be turned into $10,000 because 100x100. If leverage was 1:50, the trade size would have been $5,000 because 100x50.
But be careful, leverage is a very dangerous tool that only experienced traders should use.
Negative balance protection is one of our risk management features which serves as a precautionary measure preventing our clients from losing more money than they deposited. Should clients’ trades result in negative balance, it is then reset to 0.
In the Forex trading industry, there’s common knowledge about how much capital to trade Forex for a living, that traders can withdraw about 1-3% of their funds that they can actually spend, while the rest of the funds is returned to the trading process.
Based on this information, one can get a pretty good idea of how much capital they need to put into the foreign exchange to actually get a decent monthly salary. And when it comes to professional Forex traders, they usually open accounts that are no smaller than hundreds of thousands of dollars in size.
This way, their income can vary from thousands or tens of thousands of dollars per month. But there’s a catch to it: by increasing their account sizes and possible payouts, they also risk more money for a loss.
Starting Forex trading is a complex process that can be different for various people. There are people who pursue different methods and options that can be expensive, cheap, and even free.
For example, a Forex trading tutorial can be free when traders use demo accounts. Demo accounts allow traders to use various tools that are incremental to Forex trading, testing them in real life, and acquiring knowledge as a result. And all of that without spending a buck.
However, some traders believe that demo accounts cannot be effective because there’s no risk or reward associated with them. That’s why they opt for either micro, mini, or standard accounts. Micro accounts allow traders to make smaller deposits such as $50 and still trade Forex, while standard accounts ask for much higher sums like $200 and more. Mini accounts are somewhere between the two.
Currently, we offer various payment methods:
- International wire transfer
- Credit/debit card
When trading Forex, the software doesn’t necessarily measure your trades with quotes. It measures them with lots. A lot is basically a number of currency units. For example, $100,000 is 1 standard lot, $10,000 is one mini lot and etc.
When measuring the volume of your trades, you will never see direct quotes used as a unit of measurement.
It’s all about research and analysis, all types of orders in FX have their purpose. Do you think that a FX pair is going to rise in the future, then most traders would go for opening a market order because they’re sure the exchange rate won’t fall.
If you think that the exchange rate is first going to fall and then rise, then most traders would open a limit order where they instruct the broker to start a trade when the pair reaches a certain exchange rate.
Bank wire transfer usually takes about 3 - 10 working days. The card deposit options are usually processed within a couple of hours. For more information click here.
Forex trading can be profitable in multiple ways. It can be a side income enough to buy you a couple of lunches, or it could be a primary income enough to pay the bills and buy houses. However, both of these versions have their risks and issues.
A smaller income is much more likely than a large income. It all depends on how well a trader manages the risk, and how well they follow strategies to remain profitable.
All transactions will be converted to the base currency of your account based on the actual spot exchange rate in our bank for that day.
Forex trading, along with other types of trading, is a very risky job and requires a lot of attention from traders. And there are various reasons why this is the case.
First, the currency prices can be quite volatile, meaning they can go up and down very quickly and with large differences. Anyone who has bought a large number of currency pairs is risking their funds because of such sudden price movements.
Another risky element that is necessary to understand when trading FX for a living is leverage. Many service providers offer leverages to increase payouts received from trades and it can be quite useful for traders as well. However, this indicator also increases the size of the potential loss of the trader. So, it’s an indicator that needs to be used safely.
Leverage is probably the most important part of CFDs. It can be said that the whole idea of how CFDs work
lies within leverage itself.
When opening a trade, a person can include leverage, which means that your trade is going to grow in size. This could mean bigger payouts or much bigger losses. It’s usually not recommended for beginners to use unless they’re absolutely sure they know what they are doing.
Most CFD instruments have fixed leverage ratings. For example:
- FX - up to 1:1000
- Stocks - around 1:50
- Commodities - around 1:50
Cryptocurrencies - around 1:2
When a trader opens leveraged positions using their margin account, they receive large funds from their broker. However, the broker still requires a certain margin requirement (used margin) from its client to make sure a trader is serious about opened positions.
A Forex broker takes that money from the trader’s account balance. The more positions are placed, the larger the used margin. There is a limit to how big it can become.
The available equity is basically a whole account size of the trader and that’s what is compared to the used margin. If the available equity is more than the used margin, a trader can open new trades.
However, there are moments when the two indicators become equal. This is called a zero margin (or maintenance margin) and it marks the point when brokers start sending margin calls to their clients - notifications to refill the account.
The maximum trade size depends on the instrument chosen for trading. Here are the maximum trade volumes per individual instrument:
X: 1000 lots
NIKKEI: 250 lots
HK50: 25 lots
FTSE: 100 lots
STOXX50: 50 lots
CAC: 10 lots
DAX: 40 lots
ASX: 25 lots
DOW: 200 lots
NSDQ: 125 lots
SP: 100 lots
CL: 50 lots
NGAS: 1000 lots
There are a lot of ways to learn about the financial markets, but some are better than others. There are many experts today, and almost all of them have had a unique learning experience, so there’s no real “default” learning strategy.
Usually, beginners start with reading articles, learning the slang of financial markets, the abbreviations and tools that they can use.
The other option is sometimes to just start trading right away and learning as they go, but that’s usually much harder.
The most popular method is trying a small piece of every strategy. This helps the trader try everything out before devoting him or herself to one method. Once they’ve found their perfect solution, they focus a lot of attention on it.
Learning Forex trading, just like actually doing it, is a complex process and traders pursue it quite differently. For example, there are some traders who go as far as enrolling in universities and getting a degree in economics. This, in turn, is quite a resource-consuming process that not many people can afford.
More often than not, beginner traders tend to gain theoretical knowledge first by reading various source materials and then going straight to trading Forex. The internet is full of such materials, including online books, articles, tutorials, and guides.
There’s a third category of traders that pursue quite a different method. Instead of acquiring any theoretical knowledge, they go straight with trading and learning various skills along the way. It’s not clear which method is more effective than the other - it’s about testing and seeing, which one works best for you.
We keep your funds protected based on three main pillars.
Negative Balance Protection
With negative balance protection you never have to worry about your account going negative or losing more money than you initially invested. In the case of a significant price movement that leads to a negative balance, we reset your balance to zero and cover your additional losses.
Segregation of Funds
Our clients’ deposits are strictly segregated from the company’s funds. Globally renowned auditing company PwC issues two reports per year proving a true and complete segregation of accounts.
Member Of The Financial Commission
Axiory holds a Category A membership with the Financial Commission, and independent organization specializing in the resolution of disputes. Clients can present their complaints to the Financial Commision at any time.
In the case where a resolution cannot be found, the Financial Commission offers a compensation fund of up to 20,000 USD.
A margin is a tool used by brokers on Forex, as well as other markets, for ensuring their financial stability. When they offer leverages, they basically lend their customers their own money. It’s not a surprise that they want to have some guarantees that their funds are safe.
To make sure that the funds are actually safe, brokers use margin requirements. A margin is depicted as a percentage and reflects the requirement of the actual deposit. For example, if a leveraged position is $100,000 and the margin requirement is 1%, a trader is required to make a deposit of $1,000 on their own. This makes sure that they are serious about trading.
There are many ways of learning to trade to become good at it. A more traditional way would be to get a university degree in economics or finances. And while it takes a lot of time to complete your studies, you can actually get some valuable knowledge that can easily translate into online trading.
However, you can also get trading skills by searching through the internet and finding various materials about this subject. You can actually find a lot of valuable books and tutorials that can help you gain some basic and even comprehensive knowledge. But research about trading can be a bit long and tiring
Stop-loss prevents you from losing too much of your investment in one trade. Take profit helps you to lock-in what you’ve already earned.
They benefit you because the market is very unpredictable. At one moment everything could be going very well, and in another, it could start falling without any reason.
Plus, you’re not always near your computer, so you can’t close trades that have become unprofitable. A stop loss would close them for you and prevent your account from taking too much damage.
When starting a career as a Forex trader, people usually make some sort of a plan that covers various aspects of this sector. Usually, what beginner traders tend to do, is get a basic trading FX tutorial first, understand what its main aspects are, and how it works.
Then, they decide which currency pair they want to buy. There’s one important aspect to mention here: some currency pairs like EUR/USD are more stable and secure than others. On the other hand, the latter have potentially bigger payouts because dramatic changes in exchange rates are more common for them.
After choosing a currency pair, traders tend to decide their overall budget and how much they’ll be using for individual lots. Here, they choose between demo (if they want to trade virtually), micro, mini, or standard accounts, depending on how much of their funds they are going to spend on Forex trading.
And then, after these basic steps are done, they go on with trading itself. Of course, there are other methods and plan structures to be used. Developing the best plan is usually possible by testing all of them.
About a week or a couple of days. Every trade is based on a futures contract, which has a CFD deadline. If you do not close your trade before the deadline, the system will do it for you. Sure you can pay a fee to extend the deadline, but as already mentioned in the article, that could prove to be very expensive if done often. A common strategy for CFD traders is to predict very small changes in the market and open leveraged positions that they can close very fast.
It’s best to stay within the number of funds you currently have on your account. This is actually when the Forex lot sizes come in pretty handy.
If you have an account with less than $1000 then you’ll be calculating in nano lots. If it’s less than $10,000 then you calculate in micro-lots. And if it’s less than $100,000 then you should calculate with mini lots.
But, it all depends on your preference; the above-mentioned example is simply what people usually go for.
Starting your own online trading career isn’t exactly difficult. There are various methods that you can use either separately or in combinations. The easiest and most secure way is to start educating yourself first, gathering all the information about the market, assets, and terminologies.
Another method is starting to trade straight away. However, this might be a bit risky and even difficult, that’s why you can do small-scale trading by putting the least amount of resources at risk.
Or, you can combine the two methods and educate yourself with different materials while also trading online. Now, some people have been successful at one method and some at another, there isn’t one universal way - a very popular strategy is to try everything and see what works best for you.
In Forex, or in any other trading market, there are various methods of minimizing risks and through a Forex trade guide, gain knowledge and experience. And in this sense, probably the most popular method is going for a demo account.
Demo accounts are offered by many financial exchanges and more often than not, opening a demo account is a very simple process. And when it comes to actually operating it, there aren’t many difficulties associated with it.
Demo accounts work like the standard live accounts - they have pips, charts, prices, etc. And more importantly, traders can buy any currency pair that they prefer - virtually, of course. And that’s the difference: demo accounts have no deposit requirements at the beginning or real payouts in the end.
There’s such a thing called a pip spread definition in Forex. It’s usually different depending on the service provider you are using as it’s up to them to decide how to price their pips. But let’s consider that a standard lot pip is worth $10.
If you spread it to 2 pips, this means that you will have to pay $20 per 1 standard lot trader. A mini lot would cost $2, a micro lot would be $0.2 and a nano lot would be $0.02.
Not necessarily. Usually, the risk is calculated based on the volatility of an asset. Considering that stocks have higher volatility, more traders would agree that stocks are riskier. However, it all depends on the strategies and the mentality you use when entering either of these markets.
If you go in with no knowledge, experience or tools, it’s very likely that you will lose much more than you win.
Therefore, don’t think that just because one asset is riskier than the other, you’ll be safe with the less risky one. No matter how we look at it, financial markets are a very hard thing to navigate, and usually result in a loss rather than a win.
When it comes to the margin, there is an element called the margin level that indicates how much funds are left on the account to open new leveraged positions. It is a combination of the two additional elements: the available equity and the used margin.
To calculate the margin level, you must divide the available equity by the used margin and put it in percentages: (available equity/used margins)x100%. If the margin level is above 100%, a trader can open new trades.
But, if the margin level goes below 100%, the broker will start “stopping out” the current positions. A stop out in Forex usually happens at the 50% margin level. In real numbers, it means that the funds on the account are half the size of the funds taken by the broker. And at this point, the positions will be closed automatically until the margin level goes above 50%
The biggest reason why people want to start reading an FX guide and begin trading is that it can have a profitable payout. There are many stories of Forex traders becoming rich in an instant and that captivates people; it makes them want to do the same and become successful.
But there’s a hidden threat here: while trading Forex is certainly profitable and has high payouts, it’s worth noting that without experience and knowledge, the chances of financial failure are more realistic than of success.
And even if one manages to gain knowledge, the risk doesn’t go away completely. This goes to show that yes, trading Forex can bring larger returns to your financial exchange but you need to be aware of risks and setbacks associated with it as well.
After calculating the number of pips received from the trade, the next step is determining the actual value of those pips. To do that, traders need three elements: the number of pips, the current exchange rate of the pair, and the size of the lot made by a trader.
So, here’s how it goes: the number of pips is divided by the exchange rate, and the resulting number is multiplied by the size of the lot. The pip value can vary from time to time because the exchange rates change all the time.
Currency pairs are the most important elements of Forex trading because they are used as assets for the actual trading process. People buy and sell currency pairs to generate payouts.
A currency pair consists of two elements, as we have already mentioned: the base and quote currencies. They are separated by a slash between them like this - EUR/USD. A currency pair represents the amount of the second currency (the quote) that is needed to buy the first one (the base).
In most cases, No. Nearly 90% of traders are usually unsuccessful in Forex trading and don’t have any returns.
However, those that dedicate time and energy to learning how the market works, researching all of their currency pairs and being prepared for trends tend to have at least some kind of return.
Forex trading is not worth it if a trader is not ready to take risks and learn completely new things he or she has never heard of.
A successful Forex trading process, the one that allows traders to get sufficient income from it, is associated with big deposits and massive purchases of currency pairs. That’s usually the case because only a fraction of the actual account size, somewhere around 1-3%, can be withdrawn for regular expenses.
Other than that, there are actually some ways in which traders can still earn money by not making financial commitments. One of the methods is called no deposit bonus. This method is offered by some service providers and it allows traders to open accounts, get initial deposit bonuses from the provider like $100, and if they fulfill some deadlines and goals, they can get whatever payout they have generated as a result.
There are various ways of trading commodities. The most direct way is to purchase a futures contract for a given commodity. A futures contract is an agreement between the seller and a buyer that the commodity will be bought at a certain price in the future when it is produced and ready for trading.
Apart from futures, there are other indirect methods. For instance, traders can purchase stocks in commodity-based corporations and get a payout from their performance. Or, they can purchase mutual or index funds and they will buy those stocks for the traders.
Charts in Forex represent the past price movement of a currency pair. Of course, traders can write down these prices on a sheet or in a spreadsheet, however, this method is far more burdensome because the numbers tend to be less visually expressive.
That’s why the charts are more often used. Understanding a chart is quite easy: the x-axis (vertical) represents the time frame, while the y-axis shows the price of an asset. Depending on which type of chart you choose, you’ll see a price movement represented in a line, a bar, or a combination of these two.
Not at all. As mentioned in the article multiple times, online trading is a very speculative business that frequently leads people to financial hardship. You might be hearing stories about successful online traders and how they became millionaires. And many of them are true.
However, there are even more stories of unsuccessful traders. And it can be attributed to many reasons: they might have been inexperienced in trading, maybe they rushed a little bit too much, or maybe the market behaved unexpectedly. The point is, there are a lot of factors that can work against you and being prepared to face them is usually a good idea.
No. If there was a 100% profitable strategy, everybody would be using it. Once they do, it stops being a 100% profitable strategy simply because somebody needs to be unprofitable, so that we have profitable traders.
The way Forex trading profit potential works is that a strategy is created by some traders and spread in the community. If enough people catch on, then the market becomes predictable. Those who spread the information will know the trend and therefore trade accordingly to make a profit in the long run.
Leverage is a tool used by many traders, as well as offered by many service providers - brokers, for several reasons, among which are increased payouts, access to expensive assets, etc.
When entering the market for trade, be it Forex, commodities, or anything else, your broker might usually have a certain leverage amount in their offer package. With just a simple notice, you can incorporate this tool into your trades, making them more effective - but also more dangerous.
One thing to keep in mind here is that the brokers usually demand a certain amount of actual deposits from the clients. This means that while you’ll be controlling a large position size in a trade, a certain percentage of that position will be your own money.
In trading, there is a difference between the bid and ask prices for a reason. Usually, the bidding prices are lower and the asking prices are higher. For instance, the EUR/USD currency pair might have a bidding price of 1.2344 and the asking price of 1.2346.
The difference of 0.0002 is called spread with an amount of 2 pips. And those 2 pips are what generate profit for service providers. In fact, the majority of brokers and other providers are based on the income from spreads because they don’t impose additional fees on traders.
So, if the bid price suddenly becomes higher than the ask price, there will be nothing for a provider to get a payout from. That’s because they sell assets more expensively - so that traders can get fewer amounts - and buy them more cheaply - so that they can get larger amounts. Therefore, the bid price is almost never higher than the ask price.
It’s definitely not a requirement, but people who trade only local assets exclusively, tend to be a bit more successful than those who trade internationally.
The reasons behind it are that local politics usually have a lot to do with stock prices as well as currency exchange rates. If a trader understands the complex political situation of a country, he or she is much more likely to predict future policies or what those policies could cause.
It’s not recommended to trade local assets exclusively though, as every expert trader tends to diversify their portfolio.
But when it comes to stocks vs Forex, both markets have the option to keep you on only local assets exclusively.
Forex may need a lot of time to truly learn, but that doesn’t mean that traders have to abandon everything else.
Thanks to modern technology, a personal computer is not the only device you can learn Forex or trade it. Every device such as smartphones and tablets have their own software that people can use.
Realistic Forex returns don’t become more realistic because you’re dedicating 8 hours a day to trading. They become real when you’ve dedicated 8 hours a day to learning in the past and are now quite experienced.
No. Much like any other trading method, CFD trading is very risky and requires just as much research as FX trading or stock trading would. Although CFDs can potentially bring a lot in payouts, they can potentially bring much more in losses as well. And considering how the financial market works, a loss is much more likely.
Not necessarily. They both have their advantages and disadvantages. For example, the fixed spread gives a guarantee that you will be charged only 1 pip per lot no matter what. A floating spread could possibly charge you 1.2 pips per lot or 0.8 pips per lot depending on how the market is performing.
There’s a risk factor with floating spreads, but it has a chance of being a bit more profitable for the trader. In most cases though, traders choose to go with fixed spreads so that they don’t have to do too much calculating.
Yes, definitely. Success stories are always something that can give a trader the motivation to continue learning and trading on the market. However, some of them are not supposed to be taken seriously.
For example, a lot of successful Forex traders have mentioned that the risks that got them where they are now, would never have been taken if they had their current knowledge. Therefore, it’s safe to say that most successful Forex traders don’t recommend their strategies due to how risky they are.
Trading Forex, just like any other asset type, has its own advantages and disadvantages. Some people prefer a foreign exchange of currencies over buying and selling stocks, commodities, or cryptocurrencies.
And when it comes to the FX trading advantages, there are certain points to take into consideration: first, the Forex market is very liquid, meaning that at any time, it’s possible to buy or sell currencies using cash because, well, the currency is itself a form of money.
Another reason why Forex might be preferable for traders is the ability to make smaller deposits. It’s especially beneficial for beginner traders who want to get into this business.
Then there are smaller commissions, easily “readable” markets, directly tradable assets, etc. But that’s not to say that risks aren’t present here. Volatility - a sudden change in price - can have a detrimental influence even on experienced traders.
In trading, be it Forex, stocks, or any other market, there are individual assets that can be traded. However, they are not the only assets on the market. Traders can use ETFs, mutual funds, and other forms of trading equally successfully (or unsuccessfully).
Indices are among those alternative trading options. They combine individual assets into one group where their prices are measured and offered as an average value of the whole index. It’s basically a portfolio of different assets that makes their prices more stable.
The most popular indices can be found in a stock market. The S&P 500, Dow Jones, The FTSE 100, and other indices are considered the most influential stock collections because they combine the biggest companies in the world. Therefore, a change in their value can represent the condition of the whole economy.
As we have already discussed in the article, there are two types of brokers in Forex: STP and ECN brokers. STPs are the middlemen between traders and liquidity providers, while ECNs connect them directly without getting in their way.
One of the main advantages of the ECN broker over the STP broker is that there are many price quotes from different liquidity providers. Traders can easily choose the highest bid and lowest ask prices, effectively minimizing the spreads and lost payouts.
Another advantage is that trades happen almost instantly - right after the position is open and a trade placed. Not only that, brokers cannot trade against their clients, whereas STP brokers can actually benefit from their clients’ losses. These and other advantages make ECN brokers quite attractive to many traders.
Trading is a very diverse financial activity and unites various trading types in its catalog. The most popular types are:
- Forex - trading with foreign currencies and taking advantage of differences between their prices;
- Stocks - trading with company shares that change depending on the prestige and success of the company;
- Commodities - trading with gold, silver, oil, and other raw material that can be found on our planet;
- Cryptocurrencies - trading with digital currencies like Bitcoin or other cryptocurrencies.
- Bonds - lending the government some funds for future payouts
- Derivatives - trading on credit
There are, of course, other types of trading like real estate, and many more. In fact, people can trade with any asset that they have. It’s just those types that are considered to be the most popular.
Your profitability rate is dependant on how much you are willing to risk. For example, it’s considered that if traders risk around $1,000 there’s a chance of having $20,000 per year. But all of that is just guessing, there is no real predetermined amount that one can make as a profit.
One thing that is considered to be true is that in order to remain profitable, the profitability of your trades needs to be above 50%. So if you are making 100 trades with the same amount and 51 of them are successful, then you’ve made a profit. Considering that the market is extremely unpredictable and very volatile.
Having a goal of 1-5% profitability is quite realistic.
There are various benefits of leverage that make this tool so appealing to many traders. The first and most apparent one is that it increases the payout size. If the leverage is 1:200, the payouts will also be increased by x200.
Another benefit is that traders will be able to receive their goal payouts much quicker. This way, they will have the ability to return the payouts more frequently to the trading operations, making even more payouts in a shorter period of time.
The next benefit is that for certain assets like Forex currency pairs, which usually have lower volatility. Without leverage, a payout would be insignificant. However, leverage makes the slightest change in price much more effective and beneficial.
Lastly, the traders who stayed away from expensive assets like gold or Bitcoin will now be able to access them because they control larger position sizes. All that thanks to the leveraged funds.
One of the main characteristics of trading is that it usually requires large deposits and position sizes. By opening significant positions, traders are able to get larger payouts from individual trades. However, many people cannot make a deposit that is worth one lot (100,000 currency units).
That’s where margin trading comes in. Service providers use margin to lend their clients a significant amount of money so that they increase their position sizes. That, in turn, makes upcoming payouts considerably larger.
Not only that, traders are now able to get to the more expensive assets like gold, cryptocurrencies, and others. But there are also other advantages like: being able to get payouts more quickly and put them back into trading, making use of lower volatility rates, etc.
There are many cases of safe online trading stories, but it’s mostly due to a lot of luck. there are many dangers associated with online trading. The first and most basic one is the lack of experience. Taking things slow is not something to be ashamed of, in fact, it’s something that the most successful traders did back when they were just beginners. Once they had gained the knowledge they needed, they started to increase the risk of their trades, but before that, almost nobody dedicated all of their resources at once.
But even if you’re experienced and have gained enough knowledge in this business, there are still some possibilities of market failure or crisis. So, staying attentive and keeping an eye on every major development is a very common practice for successful traders.
Many people can agree that online trading can sometimes be a very intimidating process because it has so many individual elements and factors to take into account. And while every trader has their own story of how they stepped into this world, one thing is for sure:
You need to have a proper mindset. Keeping in mind that it’s probably going to take a while for you to get some significant results will prepare you for almost everything in this field.
Then you need to decide which type of trading is right for you. Is it stocks, commodities, or anything else? Knowing the market type can make it simple for you to get more educated rather than reading materials about every asset type.
Then you can make plans about when to trade, which platform to use, how much resources to spend, and more. Going step by step is usually a good strategy for staying focused and not getting overwhelmed.
When trading commodities, people can choose from two main categories: hard and soft commodities. If they want to trade gold or oil, they are using hard commodities, while if their goal is to exchange wheat or milk, they use soft commodities.
In general, metals and energy resources make up hard commodities. They are called hard because people need to mine or extract them from the ground. The most popular hard commodities are oil and gold, and the global economy is heavily dependent on them.
As for the soft commodities, livestock/meat and agriculture make up this category. They are called soft because they require care and nourishment. For instance, cattle need feeding and milking, wheat needs irrigating and cultivating - only after those procedures can people receive the commodities.
Traders who use margin trading can increase the payout size of an individual trade. However, this tool has its own disadvantages that are worth mentioning.
While it increases payouts, it also does the same for possible losses. Imagine this: you bought a currency pair for $1,000. After some time, you decide to sell it because the price is going low every day. You sell the pair and get $998 back. In total, you lost $2.
Now imagine that you did the same trade but with a margin account. If the margin requirement was 1%, your initial $1,000 would become a $100,000 position size. And if exactly the same thing happened as in the above-mentioned example, you would get $99,800 back. So, instead of $2, you actually lost $200 which would be subtracted from your deposit, not from the borrowed one.
Therefore, while it is very useful, the margin can also be risky.
Since online trading is this complex thing with various elements in it, the factors that drive the prices are also diverse. Depending on which type of trading you’re doing, global politics, economy, and even culture can have a massive influence on prices.
For example, in Forex trading, the monetary policy of a country can have a big impact on the exchange rates. This, in turn, can increase or decrease the differences between the buying/selling prices and translate into payouts. When the goal of a trader is to learn how to trade online, they often look into how governments manage their monetary policy, because it helps predict future changes.
There is no such thing. If there was, then everybody would be using it. In most cases, whenever a strategy comes up with a decent success rate, people use it extensively and help the market adapt to it. Therefore, most of the successful strategies are usually kept secret by those who make them.
Charts in Forex and other markets are used for technical analysis. It is a method which traders can use to predict the future price movement of their assets. Basically, if the price pattern behaves in a certain way, traders, who use this method, believe that it’ll probably continue going in the same direction.
For example, if the price is increasing from the left side of the chart to the right side, they may predict that it will continue in this upward direction and therefore, decide to buy a pair until it’s not too expensive.
And, if the price is declining from the left side of the chart to the right side, they may deduce that it will continue declining and decide to sell the pair until it’s not too cheap.
There are three most popular chart types in Forex: line, bar, and candlestick. A line chart is the simplest one out of the three. It uses a simple line to represent the closing price of the currency pair in a given time frame.
A bar chart is more complex, however, it doesn’t have a long-term price dimension as the line chart does. The bar chart shows four different prices of a pair - highest/lowest and opening/closing - in a single horizontal line.
Out of all three, candlestick charts are the most complex and most commonly-used charts in Forex. That’s because they combine both the long-term time frames and four price indicators in a single chart. With it, traders can analyze the highest/lowest and the opening/closing prices of their Forex pairs in their preferred time - be it a minute, hour, day, or longer.
There are dozens of software types for beginner traders, but the majority of them are hard to see in the current market trends.
One reason why software is important when learning how to start Forex trading is because of how complicated it could be. You see, every software has its extra feature that helps them stand out. It could be dozens of screens that you can look at, or it could be automated trades that you can set.
Regardless though, it’s likely that the most common software you will find is MetaTrader 4 or MetaTrader 5. These two are the most popular in the market right now, with the majority of brokers using them.
There are 3 types of software. They all have their names besides 1 and are optimized on Forex trading for newbies. There’s the WebTrader that can be used in your web browser. There’s the MobileTrader that can be used on any mobile device such as a smartphone or a tablet. And there’s the Desktop version which you will have to download and install on your PC or Mac.
Thankfully all of the software is designed to work well on both Android and iOS, so it won’t be hard finding something that suits your choice of brands.
As long as it is called a financial instrument, it can be traded through CFDs. This includes things such as stocks, commodities, indices, cryptocurrencies, currencies, bonds and pretty much anything else.
This is considered to be the biggest advantage of CFDs. If it turns out that the currency market is not doing too well, CFD traders can quickly switch to stocks, and then to commodities if necessary. It’s a good way to diversify the portfolio.
Forex and commodities are two separate trading markets. The former uses currency pairs, while the latter - basic goods or natural resources. However, there are still some connections between them.
First off, many Forex brokers offer commodities next to the currency pairs. This way, traders don’t need to find different brokers for different assets - both commodities and currencies can be found in a single place.
Not only that, the commodity prices are reflected in currencies, mostly in the US dollar. For example, the price of one gallon can be shown as 1.24 USD. This way, the two markets are interconnected and the developments in one market will have an effect on another.
This also depends on where you live and how much knowledge you have about specific currencies. In most cases, beginner traders usually go for EUR/USD if they’re not sure about their native currency, or can’t find a broker that has a pair for them.
The EUR/USD is considered as one of the most stable ones in the market, which is why it has the most traders. Having two of the largest economies back this currency pair usually guarantees that there will be no huge changes in a single day. This pair can be found in almost every beginners guide to Forex trading and deservedly so.
Both Forex and stocks have quite a lot to offer in terms of market knowledge, but they also can teach about politics, economics, finances and general issues that can be found in the world.
For example, when trading Forex, most people tend to look for political news rather than news from separate companies. For example, Brexit. Every trader was very conservative about making risky trades while Brexit was still being debated, but now that it’s pretty much-guaranteed traders are a lot more open to risk.
By trading Forex, it’s very likely that you as a trader will find out quite a lot about politics.
As for stocks, traders tend to seek information about the particular industry they invest in. This helps them learn about economics as well as politics. It sometimes teaches traders how or how not to run companies based on the stock price changes.
All in all Forex vs stock trading in terms of education is pretty tied as they both provide very important knowledge.
Because margin traders use borrowed funds to increase their trading positions, they need to pay or can get additional interest (swap) from/on their account. It depends on many things, most importantly - the interest rates of the individual currencies.
A swap loss occurs when the interest rate of the sold currency is higher than the one of the bought currency. So, if a trader wants to buy EUR/USD and USD has a higher interest rate, they will be charged with additional swap if they leave the position open overnight.
Financial markets are important because they regulate how the economy works in the world. They are the reason why prices change and how they change.
The more active people are on the markets, the higher the price is going to get, but if people start ignoring it, then prices can decrease so much that a crisis may start.
The financial markets are what usually support large corporations to remain large, therefore giving a lot of people jobs and opportunities to develop themselves as well as help their families.
In a Forex currency pair, the first currency is called the base currency, while the second one is called the quote currency. It represents the amount of that currency needed to buy the base currency.
For example, in the EUR/USD currency pair, the US dollar is the quote currency which shows how much US dollars is necessary to buy one euro. When traders say they want to buy a EUR/USD currency pair (or any other), they actually want to sell their dollars and buy euros with that.
Nothing happens. If you have low trading volume it doesn’t mean that your broker will close your account or give you some kind of penalty. It just means that you are not yet ready for a more complicated account with more tools.
Basically, the moment you reach required trading volumes, the broker will likely contact you and ask you if you’re ready for a new account. Besides that, nothing really happens.
Knowledge is something which is the difference between Forex and stock market and could lead to different results.
But stocks being more familiar is not necessarily true, but technically it can be justified. We all know what currencies are, right? Especially the ones we use on a daily basis. But we don’t necessarily know all the details of what affects their exchange rate. It could be the economy, or it could be politics.
With stocks, it’s much simpler to understand. Did the company you’re investing in grow last year? Well, that means that this year they are going to try extra hard to beat last year’s results. This usually gives traders an idea that the company is going to grow even more and they tend to buy at this point.
But let’s try a different perspective. Let’s imagine that you really like Japanese cars and invest in a company like Toyota. You know exactly how people react to new models because you are one of their customers.
But, you soon find out that several countries will be banning cars that have steering wheels on the right side. This means that fewer countries will import Toyota cars, so fewer of them will be sold. This usually means that the stock price is going to drop for Toyota, because traders think they will have fewer sales in the future, thus avoiding losses early on.
The difference between Forex and stock brokers is that they perceive their customers differently. For example, a Forex broker sees its customers as traders, while a stock broker sees them as investors.
The Forex broker knows that its customers will have a lot of trades within the day, so they’re okay with allowing smaller deposits because commission fees are much more frequent.
As for stock brokers, they know that their customers will make a trade maybe once a month, therefore they have to request larger deposits so that their commission fees are a bit bigger.
When trading on the foreign exchange market, traders can either choose to buy the currency pairs or sell them. If they buy a pair, it means they go long with their position. And if they sell it, they go short.
The same applies to the swap trading in Forex. When traders buy a currency pair and leave the position open overnight, they use a long swap. And if they sell the pair and leave the position overnight, they use a short swap.
Depending on which swap position a trader chooses and what interest rates the individual currencies have, their account might be credited or charged with the swap after each trading day.
This could be a bit hard to understand at first, but it all comes to learning how to control your emotions when trading.
You see, when a tutorial Forex trading experience takes the risk out of the learning process, you could end up thinking that it’s very easy. The reality is that Forex trading is one of the hardest things one can do and succeed at.
The tutorial helps you not care about the funds you use for trades, and therefore be a bit more liberal with how you use them.
But, when you use your hard-earned money, the risk starts to affect you and makes you a lot more careful. This method is usually done with very little amounts so that the risk is kept to a minimum.
Pips are used to measure the buying and selling price difference between the currency pairs. There are two main formulas used to measure them:
The first formula is used for most currency pairs. It uses the fourth number after the decimal to determine the pip. So, if the difference between prices is 0.0002, the trader will have generated 2 pips.
The second formula is used for those pairs that use Japanese yen as a base currency. The change in, say, the USD/JPY pair is so rapid that the above-mentioned method would generate thousands of pips. Instead of that, the industry has established an alternative method that uses the second number after the decimal point to determine a pip. So, if the difference is 0.04, a trader will get 4 pips.
There are several reasons why people would want to engage in trading, be it Forex, commodities, or any other market. When it comes to Forex, people usually find it easy to enter this market even if they’re beginners.
One of the main reasons behind this simplicity is the ability to make smaller deposits. Mini and Micro accounts offered by service providers allow traders to deposit, say, $50 or $100 dollars and use a complete toolset of charts, spread, and leverage.
Apart from that, there is the leverage that can increase trading volumes. For example, if a trader deposits $100 on their account, the leverage rate of 1:50 can increase that deposit to $5,000. This way, traders can buy $5,000 worth of currencies and get bigger payouts as a result.
There’s not a universal answer as to which one is simpler: trading Forex or trading stocks. Some people prefer the volatility of stocks, which leads to higher payouts but also threatens them with bigger losses. It’s a high-risk, high-return business.
But that doesn’t mean Forex isn’t. It’s also quite volatile, but not so much as stocks. People prefer some other FX advantages, and one of them is higher stability. That’s because the governments are in control of the monetary policy and they usually want to make their currencies as stable as possible.
If we take a look at the ease of getting into trading, maybe Forex might be a better option for beginners. The reason for that is the smaller deposit requirements. Traders can choose micro or mini accounts, deposit fewer funds, and minimize the risks.
In trading, there are two elements that constitute the whole price negotiation process: the bid and ask prices.
An ask is the minimum price that the seller is willing to take for their asset. For example, if a seller has a EUR/USD currency pair, they might set a price limit of 1.2346: if the price increases, it will mean that they will get less money for their asset which won’t be beneficial to them.
Indices combine the individual assets, be it stocks, currencies, commodities, or anything else. Therefore the price of one index is a reflection of these individual assets.
The most popular indices, as we’ve mentioned, can be found on stock markets. For example, the S&P 500, along with other indices, is considered a “benchmark index” because it combines the most popular and influential companies from the informational technology, health care, and other sectors.
Therefore, when economists and politicians want to get a better view of the general economic condition, they look at these indices; if the companies are successful, the index value will be higher, and the whole economy will remain strong. But if the companies aren’t successful, the index value will decline, as well as the strength of the economy. That is how indices are used in economics.
Getting an education is important in not just Forex, but in every field of trading. At least that’s how many traders have become successful in it. Of course, there are some who were lucky enough to get bigger payouts right away, but more often than not, people aren’t usually that lucky and the benefits of FX come to those who are more prepared.
Not to be too dependent on chance, traders prefer to gain some knowledge in the field, get to know the main indicators and drivers of the market and then proceed to trade.
Another strategy they usually follow is to constantly check the global politics and economy. What happens in the world can greatly influence the currency prices and thus, the payout prospects. That’s why having them in check allows traders to make more or less accurate predictions.
There’s no such thing as one particular type of trading being good or bad. Rather, it’s about how people use them and manage risks associated with them.
So, here’s why Forex trading is a bad idea in some cases: some of its risks and dangers can be no less pressing than that of other markets. There are high volatility rates to account for, because more often than not when traders buy too many currency pairs with no prior calculations, the risk of them losing funds becomes higher.
Another downside of Forex is that when service providers offer leverage, it not only increases the prospective payouts; it also expands the possible losses. And for that reason, people tend to make more calculated decisions about how many currency pairs to buy and sell.
In Forex trading, there are currency pairs that are used as trading assets. A currency pair consists of two different currencies: a base currency and a quote currency.
Here’s the Forex base currency explained: the base currency is the first element of the pair and it represents one unit of that currency that buys the second currency. For example, in the EUR/USD currency pair, the euro is the base currency and it shows how much US dollars can one euro buy.
People can do trading in various ways: they can buy individual assets when the price is low and sell them when the price is high; or they can make contracts (CFDs) with their service providers, agreeing on certain conditions and getting payouts that way.
The second method uses indices. Here’s an index trading explained: A trader and their service provider can decide that if the S&P 500 price increases, a trader will get a certain payout from it, but if it declines - there will be losses. Again, it’s a contract, so it can be arranged another way: price increase brings losses and price decline brings payouts.
In stock trading, traders don’t have that option. When they buy a stock, its price has to increase if a trader wants to get payouts. Not only that, traders actually buy the stocks, while with indices, they negotiate on position size with their service providers.
Forex is one of the most popular forms of financial exchange in the industry. So, you can easily find online material on what FX is and how it’s done.
Therefore, the first step in starting your own Forex education, that’s widely used by successful traders, is to get knowledge and skills. Knowing how currency markets work, how inflation and other political factors influence currencies, and how it translates into trading can potentially help in making better decisions.
There’s also another method of starting trading right away. Some traders believe that knowledge comes in the process, that’s why they prefer not to lose any time and start Forex trading from the beginning. It depends on the individual, so, trying different methods and working them out yourself is probably a better idea.
People, who are interested in how FX works, must also realize that it also comes with risks. Because one of the characteristics of FX, as well as other financial markets, is how easy it is to lose funds.
And like other types of markets, Forex is also very risky and requires knowledge and skills to make better trading decisions. And even then, the risk of losing funds doesn’t go away. Even FX experts are still vulnerable to currency markets and sudden changes in prices. So, they tend to get as much knowledge in Forex as possible which helps them avoid some bad decisions.
When the margin level goes below a certain point - usually it’s 50% in Forex, - the broker starts to automatically close the positions. This is called a stop out and it happens without the broker’s actions.
Some people mix stop out and stop out level and while the two are similar in a fundamental way, they still are two different things. On the one hand, a stop out is an event that happens at some point in trading. Basically, it’s when a broker closes the positions automatically.
On the other hand, a stop out level is a certain point at which the action of “stopping out” occurs. It represents a certain margin level which is usually 50% in Forex trading. Therefore, a stop out and a stop out level are different terms, while they represent the same action.
In Forex, probably the most important actor is a Forex trader. They’re the ones who ultimately make the decisions, as well as influence some market forces such as demand.
In short, here’s the FX definition of a trader: a Forex trader is a person or an entity who buys currencies, sells them, and eventually, gets a payout. In short, Forex traders take part in price speculations and guess the right time to buy and sell currencies.
When using a margin account in Forex, traders get the ability to open considerably larger positions with smaller deposits. In this case, the broker will have a certain margin requirement (reflected in percentages) that will indicate how much of their own money they should deposit.
If a trader has, say, $5,000 on their account and a trade position is a mini lot ($10,000) with a margin requirement of 5%, a broker will take $500 from the trader’s balance in order to keep the position open.
In this case, the money taken by a broker ($500) is called used margin and it is one of the main elements of determining how much funds a trader has to open new trades. Using available equity and used margin, a trader can calculate a margin level and try to avoid margin call in Forex.
Your FX equity can be found on the software you are using to trade. In most cases, it is at the bottom-left corner of the terminal. If you’re using MT4 then it will most likely show as colored text right next to your balance.
If you’re using MT5 then you can find it in the Trade tab of the terminal, once again next to the account balance.
If for some reason you think that the equity on your account is wrong, then the best thing to do is contact the broker and ask a professional to give it a look.
Forex, just like any other type of market, is a financial activity, that’s why it’s regulated by many countries around the world. The governments ensure that traders, as well as other institutions, comply with the highest financial standards that protect customers.
And while in the majority of countries, Forex trading is legal, there are some countries that completely ban this activity. For example, Belgium, France, Israel, and some other countries prohibit their citizens from trading Forex.
Finance, in general, and not just Forex, is a risky business. As mentioned in the article, many traders, even the experienced ones, do sometimes lose money due to sudden price changes, as well as some bad decisions.
But sometimes, the emotional response is also a very important part of Forex. Yet many people wonder why the mindset is correlated with so many difficult aspects of Forex. Here’s what people need to realize when trying to understand FX: when things are going great and you’re getting a payout, it seems like there’s nothing to worry about.
However, as you start losing some funds, then you become anxious which brings even more losses. And ultimately, it becomes a circle of increasing losses. To avoid this, traders make a mindset that every trade has a potential loss with it.
CFDs are usually traded with CFD brokers, but there are a lot of cases where Forex brokers have started offering CFD trades as well. In most cases, the brokers have a whole collection of instruments to trade through CFDs, but there are exceptions where a broker may target only one instrument.
Almost every trading software has a Forex trading volume indicator attached to it. So, whenever you are trading, it should be very easy to simply open your account details and see the amount displayed in front of you.
If you still can’t see it or the software does not have that feature, then the best way is to simply contact your broker’s customer service and ask to be connected with an account manager. They will be able to figure out your trading volume within minutes. Or you can just see your FX lot sizes and multiply them by the exchange rate. It may not always be correct though.
Leverage is a very useful tool, especially in Forex where exchange rates change very slowly and not too often. However, it could be extremely dangerous too if the broker that provides this leverage does not provide a margin call.
A margin call is when the broker automatically closes your trade if it’s too unsuccessful. If there is no margin call, there’s always a risk that you could end up owing the broker the funds it gave to you.
As a beginner, it’s best to avoid leverage completely before you learn at least a couple of high-chance strategies.
Forex has clear advantages. One of them is leverage. Although stocks also have it, traders will usually be given around 1:5 leverage with stocks, while Forex traders can have somewhere around 1:1000 on some platforms.
This gives them the opportunity to deposit very little funds on their provider platform and trade as if they had 1000 as many resources available.
But, this doesn’t mean leverage is a very easy tool. It’s very risky and could do the opposite of generating more payouts.
There’s not necessarily such a thing as the most popular order type. Every order type has its goal and its moment when it is very useful with only a few being useful all the time. But to answer the question, the most common order type would be the stop order.
Traders place these orders to decrease the risk they face in their trading strategies, but it does not mean that it is guaranteed safety.
Spreads reflect the difference between the bidding and asking prices of assets, be it currency pairs, commodities, or something else. They exist for a reason.
When a trader buys an asset, they usually pay a higher price and get fewer amounts of it. On the other hand, when they try to sell that asset, they will receive a smaller price and still get fewer amounts of it.
In Forex, the majority of service providers don’t have commissions on their services and the only source of income for them is spreads - the difference in prices that is left to them. Therefore, the larger the spread size, the better for a service provider.
Indirect quotes are hard because they require a lot of calculating to determine the exact outcome. For example, imagine that you want to find out how many Euros you can buy with 1 dollar. You look it up on the internet and it says 0.94 per 1 dollar. Now you want to find out how many dollars you can buy with 1 Euro but can’t look up the exchange rate.
You would have to use that 0.94 to figure out what 1 Euro will get you. The equation looks like this.
X = 0.94Y
Y = X/0.94
Although it may sometimes be easy to calculate, it’s not always the case.
As noted in the article, one of the biggest advantages of ECN brokers is the fact that they aggregate (combine) lots of liquidity providers and their price quotes. This means that there are all kinds of the bid and ask offerings for the traders.
And while there may be expensive liquidity providers who have lower bid prices and higher ask prices, there will definitely be those that offer much more suitable conditions - higher bid and lower ask prices. And since all those price quotes are aggregated by a single ECN Forex broker, traders can choose the offers that suit their interests most.
Well, FX trading equity is important because it helps traders see whether they can open a new position or not.
Imagine that you have a trade open that is extremely profitable, but it’s pretty slow. You are aware that you have enough funds on your account to open a new trade because that’s what your equity is telling you. So you open a new trade and direct that newly gained equity from your previous trade to your new trade. If your decision was correct, your profits would become much larger.
However, when the first trade is unprofitable, the equity tells the trader that there’s not as much available on his or her balance to start a new trade. So it’s like a warning sign to simply close one losing position as fast as possible before starting a new one.
When traders use a margin account to increase their trading positions, and choose to leave those positions open overnight, they’re either charged or credited additional swaps (interest rates) from/on their account.
But the swap values don’t correspond to the actual days of crediting/charging. For example, if the swap is credited on Tuesday, its value is actually adjusted for Thursday. If the position is opened on Wednesday and left overnight, the swap value should be Saturday (for Thursday).
However, because Forex markets don’t work on weekends, the swap value will be credited for Monday. And to compensate, swap rates become triple in size.
You can. The direct and indirect quote in Forex is just a name and not necessarily something you absolutely have to say. You can simply refer to them as USD/EUR or EUR/USD, whichever you prefer.
However, when you are trading with the software, it’s likely that the currency you chose as your base will be referred to as the direct quote. It’s just something you have to know so that you’re not confused when using the software.
There is no obligation to call it a direct or indirect quote.
Direct quotes are very easy to calculate. There’s 0 math involved in finding out how much you have to deposit and how much payout you will receive.
In terms of foreign exchange quotations, a direct quote is pretty much the exchange rate itself. If your currency of choice is USD, then a USD/EUR is your direct quote.
Lots are a rather new concept. You see, lots in Forex became popular when the market started to shift to the internet. This meant that computers were now in charge of calculating and managing trades.
Considering how many trades happen every day, the developers needed to somehow make it easier for computers. So, they simply took large numbers and reduced them. Now 1 lot is 100,000 units of currency, which is calculated once, instead of being calculated 100,000 times.
Lots are simply ways to speed the trading process up.
Forex brokers don’t necessarily have their own storage of funds. They use things called liquidity providers. These liquidity providers are the ones that let you trade currencies and give you the funds for your leverage.
In case of a negative spread Forex pair, the liquidity provider is most likely trying to somehow acquire new retail clients or simply increase its volume for a quota. Forex brokers are often trying to not show you any negative spread options because it’s not profitable for them.
Yes and No. Traders who take the time to learn about these FX order types and truly understand what they are designed for have a much better chance of making correct guesses and planning for any change in the markets in the future.
Those who don’t know what these order types do are usually at risk of placing the wrong order and making their losses even worse.