Why trade in foreign currency exchange market?

Why trade Forex instead of stocks, futures, commodities, or options? Why more and more people nowadays started trading Forex at home? Perhaps the list of advantages in Forex trading has the answer.

Equal Prospective in Rising or Falling Market Trend

There is no structural bias to the market and there are no restrictions on short selling in FX market. Trading in Forex gives you an equal prospective in rising and falling market.

As trades are always done in pair of currency pairs, Forex traders can always find chance to make money in anytime, regardless on the fall or rise period of one single country currency.

Trade Forex 24 hours a day

Forex market never sleeps. In Forex trading, you do not need to wait the market to open, you can always response to world latest movement and news immediately.

Every Sunday 5.00pm in New York, Forex market starts its week from Sydney, followed by Tokyo, Singapore, Hong Kong, London, and New York. In Forex tradng, you can always response to the market trend a lot faster than in any other trading market.

Also, with the flexibility of Forex market trading time, you can work on your trade in Forex during your free time. This means you can start small and work as part time trader before going full time on FX trading.

High Leverage Margin

Forex brokers offer trade margin of 50, 100, 150, or even 200 to 1 of trade margin.

Forex traders often find themselves controlling a huge sum of money with little cash outlay on the table. For example, a $1,000 in a 150:1 Forex account will gives you the purchase power of $150,000 in the currency market.

While certainly not for everyone, the substantial leverage available from online currency trading firms is a powerful, moneymaking tool. Rather than merely loading up on risk as many people incorrectly assume, leverage is essential in the Forex market.

This is because the average daily percentage move of a major currency is less than 1%, whereas a stock can easily have a 10% price move on any given day.

Trade Forex anywhere from the world virtually

A computer with Internet connection plus an active Forex account are sufficient for you to execute a trade in Forex market.

Professional Forex traders have the privilege to travel around the world but yet still connected to the market anytime, anywhere. The freedom of this is something you could not get else where by being an employee of a cooperation.

High Liquidity Market

Turnover value in Forex is $1.9 trillion per day. It is the largest trade market in the world and the liquidity of the market is huge. Traders can easily cash in or cash out their capital in Forex market.

What is Forex Trading

Foreign currency exchange (Forex) market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily.

Forex is a very unique market.

Trades are always done in pairs, traders are basically buying and selling money in the same time. Beside of trading in pairs, Forex is also very special as it has no centralized trade location and trades are done around the clock.
Unlike any other financial market, investors can respond to money-value fluctuations caused by economic, social and political events at the time they occur - day or night.

The Main Definitions of Online Trading

Equity - means the secured part of the Client’s account, considering the opened positions, bound with the Balance and Floating Rate (Profit/Loss) by the following formula: Balance + Floating rate + Swap, i.e. the funds on the Client’s account less the current loss for the open positions, plus the current earnings for the open positions.

Free Margin - means the funds which are not used for the security of the opened positions. It is calculated by the formula: Free Margin = Equity - Margin.

Margin - means the amount of guarantee required for opening a position, which is equal to 1% (in the case of a 1:100 leverage) of the contract amount for the position opened.

Margin Level – is a characteristic of the state of the account. It is calculated by the formula: (Equity / Margin)*100%.

Base currency - means the currency in which the account, the balances, the commission charges and payments are nominated and calculated.

Balance - means the overall financial result of all the completed transactions and operations concerning depositing/withdrawal of funds from the commercial account.

Account History - means the list of completed transactions and non-commercial operations on the commercial account.

Settlement Currency - is the currency of the depositing/withdrawal operations.

Client - is the natural or legal person concluding conversion arbitrage operations with the Company, according to the quotations offered by the Company.

Client’s Terminal - means the software product Trader, being used, on which the Client can receive information about bidding on financial markets (within the scope determined by the Company) on a real-time basis, carry out technical analysis of markets, perform commercial operations, issue/amend/withdraw indents and receive communications from the Company.

Company - refers to the legal person or company. that provides the settlement of bargains and accounts with the Client, in accordance with the present Agreement.

Client’s Log File - refers to the file created by the client’s terminal, which registers all the inquiries and orders sent by the Client to the Dealer, with accuracy to the second.

Server’s Log File – means the file created by the server that registers all the inquiries and orders sent by the Client to the Dealer, as well as the results of their processing, with accuracy to the second.

Margin Trading - means performing arbitrage operations with currency contracts that lead to opening positions, the amount of which is several times larger than the variation margin.

Initial Margin - means the amount of the guarantee required by the Company for opening a position.

Required Margin - means the cash security required by the Company for the purpose of maintaining the open position(s).

Nonmarket Quotation - refers to the quotation satisfying all the following requirements: the presence of a wide price gap; quick return of the price to the initial level leading to the price gap; the absence of fast price movement preceding the emergence of this quotation; the absence of macroeconomic or corporate events having substantial influence on the instrument’s rate at the time of emergence of this quotation.

Non-commercial Operation - means an operation dealing with depositing (withdrawing) funds to/ from the commercial account or an operation that deals with providing or repaying credit.

Normal Market Conditions - refers to the state of the market satisfying all of the following requirements: the absence of wide gaps in the process of providing quotations to the trading platform; the absence of fast price movement; the absence of wide price gaps.

Normal Market - see "Normal Market Conditions".

Scope of a Trade Operation - refers to the product of the number of lots multiplied by the lot size.

Order – refers to the Company’s Client’s command to open or close the position after the price reaches the indent level.

Open position – means the result of the first phase of a complete transaction. As a result of opening a position, the Client undertakes obligations: to perform an opposite operation of the same volume; to maintain the equity at the level of no less than 10% of the margin required.

Opening the Market - means the resumption of trading operations after weekends, holydays or an interval between trading sessions.

Deferred Order - means the order of a Client to the Dealer to open a position after the price reaches the indent level.

Complete Transaction - consists of two opposite trading operations of the same volume (opening a position and closing the position): a purchase followed by selling or selling followed by a purchase.

Quotations Flow - means the sequence of quotations for each instrument received at the trading platform

Instant Execution - means the mechanism of providing quotations to the client without prior request, when the client sees the Dealer’s quotations flow in a real-time mode, , he or she can at any time give an order to perform a trading operation.

Point - is the unit of a rate’s low order.

The Company’s Business Hours - means the period of time during the workweek when the trading terminal of the Company carries out transactions with standard currency contracts. The exceptions are normalrest days and holidays, periods of change in the routine of the Company, as well as the time when the Clients cannot be served for technical reasons. In these cases the Company must take all the possible measures to advise the Client of the changes in the normal work routine and give him or her an opportunity to eliminate the risks resulting from these changes.

Size of a Lot - means the amount of base currency in each lot defined in the contracts’ specification.

The Developer – means “MetaQuotes Software Corp.” company, the developer of the trading platform.

Swap - means the amount of money knocked off or deposited to the Client’s account for prolongation (postponement) of a position until the next day.

Server - means the software product Trader Server, with which the Client’s orders and requests are processed; the Client is provided information about bidding at financial markets on a real-time basis; the respective obligations of the Client and the Dealer are offset, and the terms and restrictions are observed.

Adviser - means the commercial account control algorithm in the form of a program , which sends requests and orders to the server using the client’s terminal.


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