Forex trading

What is Forex?

Forex ( short for foreign exchange) is a foreign exchange market. It is used to trade at exchange rates between different currencies. The Forex market is the largest market in the world, with a daily flow of over 5 trillion dollars. The amount of currencies exchanged every day may cause the price movements of some currencies to be very volatile. It is this fluctuation that makes Forex so attractive to investors: it gives them a chance to make higher profits, but also increases risk. In the Forex market one trades in currency pairs, such as the Euro/USD or the British pound/euro.

Basically, Forex Trading is about predicting which currency will grow in relation to other currencies. In the case of the EUR/USD currency pair, for example, you have to think whether a euro will become worth more than a dollar or the other way around. If you think that the euro will grow, you will try to get rid of your dollars and get more euros. When you buy one currency, you automatically sell another one. The intention is for you to take advantage of rising and falling exchange rates when buying and selling currencies and of course to end up with more money.

What affects Forex market?

Investors in this market bet on the increase or decrease of one currency or national currency in relation to another. But why do national and international currencies lose or gain in value? What factors can affect its value? A good forex trader needs not only to know what the economic figures and news that are changing the price, but also to follow and evaluate them. A lot depends on political and non-political decisions or external market movements that can affect the value of a currency.

What are the trading hours of Forex market?

Forex is always open from Monday to Friday, even at night. Forex trading takes place all over the world, and due to the time zone it is always open. Because of different calendar holidays, such as Christmas and New Year’s Eve, sometimes there may be earlier closing. The markets operate in different hours and time zones. You can hold positions day and night with one click.

Who are Forex Brokers?

A Forex Broker is an intermediary between a client and aForex market, thus providing the opportunity to execute orders on the Forex market.

Who is Dealing Desk Broker? Who is No Dealing Desk Broker?

These are brokers who make money by taking a position in the market opposite to the position opened by the trader, and brokers who limit themselves to imposing small costs on each trade. The former are called Dealing Desk (DD) and the latter No Dealing Desk (NDD). NDDs are brokers who basically work as a bridge between you and the market. They charge a small commission for each operation to finance the maintenance of this bridge. This is a way of earning money by regulated and reliable brokers.
DD brokers play on the stock market like you do, but they take the opposite position to yours. If you win, the profit is yours, if you lose, the percentage of your investment will go to the broker.

Who is ECN Broker?

ECN stands for Electronic Communications Networks; it’ s a system that groups markings from liquidity providers and automates the clearing and settlement process by matching opposite orders, just like the Dealing Desks do. This type of broker allows retailers to access interbank markets and have low spreads, but with the addition of commissions for each executed trade. In fact, ECN brokers only earn commissions, which they charge for each transaction.

Which Forex broker should you choose?

The broker must offer a reasonable minimum of investment, high quality trading tools, solid access to customer service and no hidden account fees.
Active traders should consider brokers offering volume discounts on trading commissions and reliable mobile trading platforms.
For beginner traders it is recommended to choose a broker with well-functioning educational support (e.g. tutorials on share choice) and a possibility of chat or telephone support.

Which Forex broker can be trusted?

      • XTB Forex Broker: maximum reliability (without minimum deposit)
        Among the most used and most appreciated brokers is XTB (here on the website) . We’ re talking about one of the safest and most reliable brokers. The broker’s services are highly valued, but the strong point seems to be especially the XTB customer service. Everyone has a good opinion about it, and it’ s very important to increase trust between suppliers and traders. Trading platform: the offer includes a trustworthy platform. The platform is very simple to use and even those who have never used a platform before will be able to handle it.
        Free demo : XTB also offers all new members a free demo account. That means access to the platform in demo mode in order to carry out effective investment simulations.
      • eToro (broker with a minimum deposit of 200 €); eToro is a provider that due to its nature and the durability of its services is a real big fish of the financial markets, those who pursue extraordinary goals. eToro broker is reliable and it’ s one of the most appreciated forex brokers in Europe. Not only does eToro comply with all the features of a trustworthy broker, but it also offers a whole series of additional and useful services, which you cannot miss if you want to trade on the Forex market. You can also try out a demo account.
      • Plus500 (broker with a minimum deposit of 100 €) is a historic trading broker. We are talking about one of the “older” brokers, one of the first, that were created to carry out transactions directly on the internet. It has been present on the scene since 2008.
      • Markets.com (broker with a minimum deposit of 100 €). This brand operates in almost all sectors of online financial investment. Trading here means taking advantage of an excellent platform that offers users an opportunity to trade a large number of underlying instruments and financial assets at zero commission costs and low spreads.

Which Forex trading platform is the best?

Are you looking for a serious broker who offers all the tools you need to invest safely on the financial markets?
We have selected the best Forex platform in terms of security, trading tools, support and training.
Many professional traders use this platform because of its features which put it at the top of the range in terms of flexibility and efficiency.
With MetaTrader4 you have a wide range of indicators and graphical tools at your disposal that help you carry out real-time technical analysis, on the basis of which you can make trading operations.

What are the advantages of trading on Metatrader 4?

  • Possibility to activate automatic trading software
  • Personalised demo account
  • Full control over your trading account
  • Excellent tools for graphical analysis
  • Quick information and market news searching
  • Possibility of loading historical data even with very long duration
  • Multitude of tools for technical analysis

Customer service and technical support

When choosing a Forex broker we have to check if there are people who speak a language we know and who can help us in the face of any inconvenience or doubts. There are brokers who also enable communication via chat, telephone support, e-mail and all this 24 hours a day. And of course, those who help us must have proper knowledge of the financial markets.

What is Forex Leverage?

Leverage is the most important factor in trading Forex CFDs. Leverage is a tool that allows us to multiply the capital that we have. The best brokers such as eToro allow you, with your capital, to cover only the margin of currency change.
What is the maximum leverage in Forex?
According to ESMA guidelines, the maximum leverage in Europe is 1:30. In practice, this means that you can trade up to $30,000 for every $1,000 on your account.

Which Forex brokers are recommended to beginners?

XM Group, AvaTrade easy Markets, HF Markets, Tickmill, RoboMarkets, FXTM, Oanda, FxOro, Plus500, LCD, FxNet, Markets.com

What is a long and short position?

Depending on your hunch, you can either buy (long position) or sell (short position) on the Forex market.

What is a pip on Forex market?

It is an abbreviation for percentage point and is a type of unit of measure used in currencies. Pips represent numbers after the decimal point and indicate the smallest possible change in the exchange rate. The smaller the numbers, the better the possibilities to make investments based on information about a good exchange rate. There are often four digits after the decimal point. A change of ten would result in a price of 1.3367 (increase) or 1.3357 (decrease).

What’s a tick on Forex market?

A tick is a minimum price change (up or down) of an instrument.

What is a point on Forex market?

A point on the Forex market is a tenth of a pip expressed as the fifth decimal place of the price of a given currency pair.

What is a currency spread?

A spread is used as an indicator to verify market liquidity. In general, a low spread is synonymous with more liquidity. As far as the Forex market is concerned, the spread measures a difference between a selling price and an offer, which is practically an agreement on a broker’s commission. It is worth noting that brokers do not change the spread over a short period of time, even if they could change it on the basis of a contract. In almost all cases the value of the spread, on online forex platforms, remains as specified. Before you start trading, it is important to know the broker’s spread, because it represents the cost of each trade. It is important to consider a spread not only as a trade cost, but also to take into account the difference between the buy and sell price when closing a deal.

What is scalping?

Nowadays, scalping is one of the most popular trading strategies among retail traders who actively use it to trade in unstable markets in order to make money every day. Scalping is a specific trading strategy that aims to take advantage of small price movements in the market over a fixed period of time.