Category: 1.What is Forex?

A contract for difference (“CFD”) is a financial derivative. Derivative products track the market price of an underlying asset so that traders can speculate on whether the price will rise or fall. The price of a CFD is “derived” from the underlying asset’s price.A CFD is a contract, typically between a CFD provider and a trader,…

Spread betting is a derivative product, which means you don’t take ownership of the underlying asset but speculate on whichever direction you think its price will move up or down A forex spread bet enables you to speculate on the future price direction of a currency pair.A currency pair’s price being used on the spread bet is…

There is a secondary OTC market that provides a way for retail (“poorer”) traders to participate in the forex market. Access is granted by so-called  “forex trading providers“. Forex trading providers trade in the primary OTC market on your behalf. They find the best available prices and then add a “markup” before displaying the prices…

The spot FX market is an “off-exchange” market, also known as an over-the-counter (“OTC”) market. The off-exchange forex market is a large, growing, and liquid financial market that operates 24 hours a day. It is not a market in the traditional sense because there is no central trading location or “exchange”. In an OTC market, a customer trades directly…

A currency ETF offers exposure to a single currency or basket of currencies. Currency ETFs allow ordinary individuals to gain exposure to the forex market through a managed fund without the burdens of placing individual trades. Currency ETFs can be used to speculate on forex, diversify a portfolio, or hedge against currency risks. Here’s a list…

An “option” is a financial instrument that gives the buyer the right or the option, but not the obligation, to buy or sell an asset at a specified price on the option’s expiration date.If a trader “sold” an option, then he or she would be obliged to buy or sell an asset at a specific…

Futures are contracts to buy or sell a certain asset at a specified price on a future date (That’s why they’re called futures!). A currency future is a contract that details the price at which a currency could be bought or sold and sets a specific date for the exchange.Currency futures were created by the…

Because forex is so awesome, traders came up with a number of different ways to invest or speculate in currencies. Among the financial instruments, the most popular ones are retail forex, spot FX, currency futures, currency options, currency exchange-traded funds (or ETFs), forex CFDs, and forex spread betting. It’s important to point out that we are covering the different ways that individual (“retail”) traders can trade FX.…

The main functions of the forex market are: One important thing to note about the forex market is that while commercial and financial transactions are part of the trading volume, most currency trading is based on speculation. In other words, most of the trading volume comes from traders that buy and sell based on the short-term price movements of…

You’ve probably noticed how often we keep mentioning the U.S. dollar (USD).If the USD is one-half of every major currency pair, and the majors comprise 75% of all trades, then it’s a must to pay attention to the U.S. dollar. The USD is king! In fact, according to the International Monetary Fund (IMF), the U.S. dollar comprises…