Major currency pairs are generally thought to drive the forex market.

You should always choose a licensed, regulated broker that has at least five years of proven experience. These brokers will offer you peace of mind as they will always prioritise the protection of your funds. Once you open an active account, you can start trading forex — and you will be required to make a deposit to cover the costs of your trades. This is called https://www.cmcmarkets.com/en/learn-forex/what-is-forex a margin account which uses financial derivatives like CFDs to buy and sell currencies. Major currency pairs are generally thought to drive the forex market. They are the most commonly traded and account for over 80% of daily forex trade volume. Foreign exchange is the conversion of one currency into another at a specific rate known as the foreign exchange rate.

The leverage offered to Forex traders is usually too high and it increases the risk in trades. It’s important to consider the risks that tag along with Forex trades because there are numerous factors that may affect a currency value, including economic, environmental, and political events. Here at CAPEX, we offer Forex trading through CFDs along with several tools and features to reduce risk while trading. CFD allows traders to own not the physical assets, but give the rights of owning a certain asset . Margin – The margin is the minimum deposit that you must make in order to trade a currency pair.

What Is Forex Trading? Forex Meaning at CAPEX.com

It all depends on how you use the leverage and how you manage your risk. Have a look at the legit forex brokers in Nigeria to learn more DotBig.com about regulated brokers. Without wasting time let’s start to get acquainted with the forex trading glossary we prepared for you.

• GBP refers to the British pound; JPY refers to the Japanese yen; and HKD refers to the Hong Kong dollar, as shown in the following figure.
• Forex trading is a way of investing which involves trading one currency for another.
• Forex and currencies are affected by many reasons, including a country’s economic strength, political and social factors, and market sentiment.
• Some multinational corporations can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.
• Each name refers to the same process of buying and selling foreign currencies.

Leveraged trading therefore makes it extremely important to learn how to manage your risk. Investors will try to maximise the return they can get from a market, https://www.yeahhub.com/dotbig-ltd-review-things-to-learn-about-the-company/ while minimising their risk. So alongside interest rates and economic data, they might also look at credit ratings when deciding where to invest.

Outcome A: a profitable trade

Due to this reason, foreign exchange transactions are executed 24 hours, five days a week . Despite the decentralized nature of forex markets, the exchange rates offered in the market are the same among its participants, as arbitrage opportunities https://www.yeahhub.com/dotbig-ltd-review-things-to-learn-about-the-company/ can arise otherwise. National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies.

In a typical foreign exchange transaction, a party purchases some quantity of one currency by paying with some quantity of another currency. Forex news There are some major differences between the way the forex operates and other markets such as the U.S. stock market operate.