What is Forex?
Forex stands for “Foreign Exchange”; Forex is the currency trading market.
What is Forex Trading?
Forex Trading is the buying and/or selling of one currency against another. Since the exchanges rates between currencies fluctuate, it is possible to buy some amount of a currency while it is at a low rate, and then sell it at a high rate; or vice versa.
What are currency pairs?
Forex Trading is done via “currency pairs”, for example “EUR/USD”, which represents the Euro and the US Dollar relative to one another. When you are buying EUR/USD, you are purchasing Euros in US Dollars, and the number of Euros those dollars buy is dictated by the exchange rate. In the case of “EUR/USD”, “EUR” is known as the “base currency” while “USD” is known as the “quote currency”.
What does a Forex Broker do?
When you trade Forex, you will need to create an account with a broker, and then perform your trades through that broker, who will collect a small fee on your trades. And 4X Brokers we keep our fees low so that you can keep as much of the profit as possible.
What are Pips and Points?
Pips are units of trade. Let us consider EUR/USD, where you may opt to buy currency when the value of the EUR/USD currency pair is 1.03459. One pip would represent the “5” (i.e. the fourth decimal place in the case of EUR/USD). If the EUR/USD value then rises to 1.03469, we would say that it went up “1 pip”.
For other currency pairs, the pip might be at a different position. For example, the USD/JPY currency pair might be at 123.459, and the pip is at the second decimal place (so once again at the “5”).
In all cases, a point is one-tenth of a pip, so one digit to the right of the pip. If USD/JPY goes from 103.459 to 103.457, it has gone down two points.
When is the Forex Market open for trading?
The Forex Market opens on Sunday at 17:00 New York local time, which will be 21:00 GMT or 22:00 GMT depending on whether New York is on Daylight Saving Time (EST vs EDT). The Forex Market closes on Friday at 17:00 New York local time. The Forex Market is open at all times of the day and night between those times.
What are margins?
When you purchase one or more lots of currency, you are not expected to personally have funds on hand to cover the the entire purchase; however, you are obligated to have some fraction of that in your account, for example 1% (which we then say is leveraged 100:1). That fraction is known as the margin, and while your broker will not withdraw it from your account upon buying currency, it is tied to that until it is eventually sold.