What is Forex?
Trading Forex is the synchronous purchasing and selling of the world’s currencies on a decentralized worldwide market. It’s usually referred to as the unfamiliar trade or FX market. As one of the biggest and most fluid liquid financial sectors on the planet, its absolute normal turnover every day is accounted for to surpass $5 trillion. The forex market isn’t situated in a focal area or trade so is available to exchange 24 hours every day, including weekends.
Reasons to trade with OptiMarkets
Trading Forex Currency Pairs
Also known as the Gopher this currency pair is the second most traded within the FX market. The Yen is mostly affected by factors which hit the Asian stock market. The Federal Reserve, as well as the Bank of Japan, will have an influence over the market movement for USD/JPY.
The EUR/USD is the most heavily traded currency pair in the market, contributing 24% to the daily forex trades made in the OTC market in 2019. This particular currency pair represents two of the worlds largest economies – the European market and the U.S., therefore, making it the currency pair with the tightest spreads due to its high liquidity.
The USD/CAD is also known as the Loonie (this is due to the loon bird which makes an appearance on Canadian dollar coins) and correlates with commodity prices, oil in particular as this is Canada’s main export. It is also affected by the interest rate differential between the US and Canada.
The Swiss Franc can be used as a safe haven for most currency traders and will appreciate in value when markets become more risk-averse, and lose ground when risk appetite increases. This pair is frequently traded during geopolitical events and economic crisis.
The AUD is recognised as another commodity currency due to the country’s exports in metals and minerals, therefore, it displays strong trends due to the cyclical nature of the commodities. You will be able to see the value of the AUD rising when commodity prices rise which is different to other currencies such as the USD. In this case, traders will most likely go long when trading the AUD/USD.
The GBP/USD is probably the oldest currency pair in the FX, the pair is also known as the ‘cable’ and refers to the telegraph wires used to send bid and sell orders between London and New York. Both the USA and the UK have large employment numbers and both centre around the service sector heavily, which has an overall effect on the annual GDP of both countries.
What does Forex mean?
Forex or FX is an acronym for foreign exchange, meaning the currency belonging to a country and/or market. In trading, forex relates to the buying and selling of these currencies in order to make a financial profit when the value of those currencies change. The forex market is the world’s most liquid market with daily trading volumes exceeding five trillion dollars; which is why it’s so attractive to investors.
Advantages and Disadvantages of Trading Forex
Advantages of trading Forex
- The largest most liquid financial market.
- Some of the lowest costs involved in trading with highly competitive spreads on offer.
- Trading on leverage can enable traders to profit from incremental price movements.
- Open short and long positions in the market with a relatively small initial deposit.
Disadvantages of trading Forex
- A highly competitive market with a significant number of buyers and sellers
- Requires commitment from the trader in order to make well-informed decisions
- Trading CFDs using large leverage could also mean large losses if the market moves against you
Forex Trading Hours
|US Dollar vs Japanese Yen (USD/JPY)||24 hours|
|US Dollar vs Swiss Frank (USD/CHF)||24 hours|
|US Dollar vs Canadian Dollar (USD/CAD)||24 hours|
|Euro vs US Dollar (EUR/USD)||24 hours|
|Pound Sterling vs US Dollar (GBP/USD)||24 hours|
|Australian Dollar vs US Dollar (AUD/USD)||24 hours|