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Forex

Whether you call it forex, FX or the currency market, it all amounts to the same thing. Forex investing is nothing more than buying and selling global currency. This is one of the only global markets that operates 24-hours per day, although it does not operate on weekends. However, given the various time and date differences around the world, savvy investors can minimize even weekend downtime.

What Is It?

Compare this to the New York Stock Exchange, which has a daily turnover of around US$50 billion and it’s easy to see how the foreign exchange market is the biggest financial market in the world.

Essentially, forex trading is the act of simultaneously buying one currency while selling another, primarily for the purpose of speculation. Currency values rise (appreciate) and fall (depreciate) against each other due to a number of factors including economics and geopolitics. The common goal of forex traders is to profit from these changes in the value of one currency against another by actively speculating on which way forex prices are likely to turn in the future.

Unlike most financial markets, the OTC (over-the-counter) forex market has no physical location or central exchange and trades 24-hours a day through a global network of businesses, banks and individuals. This means that currency prices are constantly fluctuating in value against each other, offering multiple trading opportunities.

Terms to Understand

In Currency Trading, traders often use technical language that can be intimidating when you're just starting out. When you see a word you don't understand, you should refer to this page. As you familiarize yourself with the language, you'll find that your understanding of Forex concepts as a whole will improve.

  • Margin - The margin is the amount of equity necessary to open a trading position on the forex market.
  • Spread - The spread is the difference between the ask price and the bid price for a currency pair (euro and dollar, for instance).
  • Swap -    A Swap is the calculated interest rate that represents the reward or cost of holding an open position overnight as opposed to closing the position.
  • Majors - These are the primary traded currencies on the forex market. They also have the tightest spread.
  • Exotics - These are currency pairs that are rarely traded, or are only found within emerging markets. Exotics tend to have the widest spread.

Determining Profit

Determining profit when you trade FX can be difficult, and that is why Forex-Liveone offers cutting-edge calculators within our tools. Ensuring accuracy and the best possible profit from each trade has never been simpler.

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