Forex Market Players

It is very essential for you that you understand the nature of the spot forex market and who are the main players in Forex  market.
Until the last 1990, only the "big guys" could play in this Forex game. The main requirement was that you could trade only if you had about ten to fifty million Dollar to start . Forex was originally intended to be used by bankers and large institutions, and not for little investors. However, because of the rise of the internet, online forex trading firms are now able to offer trading accounts to "retail" traders like us.
Here are the major market players:

1. The Big Banks

Since the forex spot market is decentralized, it is the largest banks in the world that determine the exchange rates. Based on the supply and demand for currencies, they are generally the ones that make the bid/ask spread that we all love .
These large banks, collectively known as the interbank market, take on a big amount of forex transactions each day for both their customers and themselves. A couple of these super banks include Barclays Capital ,UBS, Citigroup and Deutsche Bank. You could say that the interbank market is The foreign exchange market.

2. Large Commercial Companies

Many large Companies take part in the foreign exchange market for the purpose of doing business. For instance, Apple must first exchange its U.S. dollars for the Japanese yen when purchasing electronic parts from Japan for their products. Since the volume they trade is much smaller than those in the interbank market, this type of market player typically deals with commercial banks for their transactions.
Mergers and acquisitions (M&A) between large companies can also create currency exchange rate fluctuations. In international cross-border M&As, a lot of currency conversations happens that could move prices around.

 

3. Governments and Central Banks

Governments and central banks, such as the European Central Bank, the Bank of England, and the Federal Reserve, are regularly involved in the forex market too. Just like companies, national governments participate in the forex market for their operations, international trade payments, and handling their foreign exchange reserves.
Meanwhile, central banks affect the forex market when they adjust interest rates to control inflation. By doing this, they can affect currency valuation. There are also instances when central banks intervene, either directly or verbally, in the forex market when they want to realign exchange rates. Sometimes, central banks think that their currency is priced too high or too low, so they start massive sell/buy operations to alter exchange rates.

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Why We Trade Forex?

Advantage of Forex

There are many benefits and advantages of forex trading. Here are some reasons why  many people are choosing to trade Forex:

No middlemen

Forex trading is independent without any middlemen and allows you to trade directly with the market for the pricing on a particular currency pair.

No commissions

There are no any no exchange fee, clearing fee, no government fee, no brokerage fee. Most brokers are serving their services through -bid-ask spread.

No fixed lot size

In the others markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5,000 ounces. In forex, you determine your own lot and your position size. This allows traders to participate with accounts as small as $1.

Transaction costs is Low

The retail transaction cost (the bid/ask spread) is usually less than 0.1% under normal market conditions. At larger dealers, the spread could be as low as 0.07%. Of course this depends on your leverage.

24-hour market

There is no waiting for the opening time. From  Monday morning opening in Australia to the afternoon close in New York, the forex market never stop. This is big facility for those who want to trade on a part-time basis, because you can choose when you want to trade: morning, noon, night, during breakfast, or in any time.

Leverage

In the forex market, a small depositor trader can control a much larger total contract value. Leverage gives the trader the ability to make good profits, and at the same time he/she can keep risk capital to a minimum.
For example, a forex broker may offer 10-1 leverage, which means that a $10 dollar margin deposit would enable a trader to buy or sell $100 worth of currencies. Similarly, with $100 dollars, one could trade with $10000 dollars.But remember that Without proper risk management, this high volume of leverage can lead to large losses as well as gains.

High Liquidity

Forex market is so liquid. This means that under normal market conditions, with a click of a mouse you can instantly buy and sell at will as there will usually be someone in the market willing to take the other side of your trade. You can even set your online trading platform to automatically close your position once your desired profit level has been reached, and/or close a trade if a trade is going against you.

Start By Low Amount

You can start your FX trading as low as possible $1.Many forex brokers offer "mini" and "micro" trading accounts, some with a minimum account deposit of $1. Like as - InstaForex Broker allow you to start $1.

Free Practice Account

Most forex brokers offer "Demo" accounts to practice trading and build your skills, like as same real account. Demo account is fully free for all.

Forex glossary

Forex glossary: 

A

Arbitrage - a type of trading with excepted risks, when opposite transactions are carried out simultaneously on the same trading instrument.
Ask - a price offered to a trader to buy currency.
Aussie - dealer’s slang for Australian Dollar.
Appreciation - rise in value of one currency against another which has a floating rate.

B

Bank of England - the Central Bank of England, BOE.
Bank of Canada - the Central Bank of Canada, BOC.
Bank of Japan - the Central Bank of Japan, BOJ.

Balance - total result of all completed financial operations on a trading account.
Balance of Trade (BoT) - difference between the volumes of exported and imported goods for a certain period of time in a country.
Bar Chart is an instrument of technical analysis; a chart where prices are indicated with the help of bars or lines.
Bear - a trader whose trading tactics counts on the decline in the currency value.
Base Currency - currency which goes first in the currency quote.

Bear Market (“bearish market”) - a market which expects that currency rates will decline, «bearish market».
Beige Book - collection of the Federal Reserve reports which contains a review of the U.S. economic dynamics.
Benchmark interest rate - minimum interest rate which investors expect when buying securities.
Bid - price offered to traders to sell currency.
Bidder - buyer.
Borrowing - borrowing of foreign currency at interest for a certain period of time in the financial market.
Big Figure - dealer’s slang to indicate currency pair movement by 100 points.
Break - rapid decline in price.
Breakout - breakdown of the price below support level or above resistance level; breakdown of the trend line.
Broker - an agent who implements investors’ orders to conduct currency selling/buying transactions.
Brokerage Company - a Brokerage, whose mission is to bring together a seller and a buyer of foreign currency.
Bull - a trader, whose trading tactics relies on the rise in currency price.
Bull Market («bullish market») - market that expects the rise in the currency rate.
Buy - currency purchase transaction.
Bundesbank - Central Bank of Germany.

C

Cancel - traders’ order to cancel Stop-Loss and Take-Profit orders.
Cancel-Replace - order from a trader to a broker to cancel prior order with simultaneous replacement of the cancelled order with a new one.
Cable - dealer’s slang for the British Pound.
Candlestick chart - tool of technical analysis, a chart where price is indicated with the help of “Japanese candles”.
Capacity Utilization - economic indicator, which shows production capacity workload.
Car Sales - economic indicator of a number of sold cars, an index of consumer demand.
Cash Market - a market where transactions are carried out at the prices specified through cash payment. Cash Flow - cash flow of the capital as a result of trading activity over a certain period of time.
Central Bank - a financial institution which regulates monetary policy of a country.
Change - difference between the price of the trading tool and its price on the closing session on the day before.
Channel - area on the trading tool chart within limits of which price movements take place.
Chain Store Sales - an economic indicator, showing retail sales dynamics.
Chart - price chart, displaying changes in price over time.
Chartist - a trader who uses charts and technical analysis indicators as tools to forecast market price movements.
Clearing - trade settlement process.
Close Order - the order closing procedure.
Collateral - trader’s insurance deposit.
Confirmation - situation on the technical analysis price chart when one or several indicators confirm the results of another indicator.
Correction - rollback of the price from the level reached.
Convertible Currency - national currency which can be freely exchanged (converted) into another currency without special approval from the Central Bank.
Counter Currency - quoted currency which appears second in the currency quote record.
Cross Rate - a currency quote without direct involvement of the USD.
Currency Conversion - exchange of one currency for another, in a financial market.
Currency Convertibility is the possibility of free exchange of one currency into another.
Currency Option - option contract which entitles a trader to buy or sell one currency for another at an agreed quote and within stipulated time frame.
Currency Pair - two indicated currencies which make up a quote at the financial market.
Currency Rate - price rate of one currency against another one.
Currency Symbols - letter symbols to indicate currency.
Currency Trading - trading operations to buy/sell one currency for another according to established rules.
Cycle - repetition of a certain pattern of price movement at time intervals.

D

Day Trader - a trader who trades at the market during one day session.
Day Trading - opening and closing of the same position within one trading day.
Day Order - trader’s order to buy or sell which is valid until the end of the trading day and is cancelled automatically in case of non-performance on the day of issue.
Dealer - market participant who deals with currency buying and selling on his own account.
Dealing - non-cash currency trading.
Dealing center - a company which provides access to financial markets by creating clients’ applications for opening currency positions.
Deposit - amount of money transferred to the trader’s account to cover further operations.
Direct Quote - amount of foreign currency required to buy a unit of national currency.
Divergence - a situation in technical analysis when charts of indicators differ from price chart.
Downtick - downward movement of currency price.
Downtrend - downward trend of currency price at the market.
Double Bottom - a pattern of technical analysis indicating the situation when the rate goes down to a certain level twice and then goes up.
Double Top - a pattern of technical analysis, displaying the situation when the rate goes up to a certain level twice and then descends.

E

Economic Indicator is a fundamental analysis indicator, which shows general trends in economy.
European Central Bank - European Central Bank, ECB.
Efficient Market Theory is a market theory, which reflects all factors, affecting changes in quotes.
Elliot Wave Theory - Elliot theory according to which prices movement has a waveform (5 waves upward, 3 waves downward).
Employment Situation - economic indicator of labor market.
EU - European Union.
EURO - Unified currency of the European Union.
European Central Bank (ECB) - Central Bank of the European currency Union.
Existing and New Home Sales - macro-economic indicator of real estate sales at the secondary housing market.
Exchange rate - the rate of buying/selling one currency for another.

F

Federal Reserve Bank - Central Bank of the United States of America.
Fed, FRS (Federal Reserve System) - Federal Reserve System of the USA.
Factory Orders - production orders (orders for durable and non-durable goods).
Figure - Dealer’s slang to indicate basic figures of the exchange rate value or 100 points of the exchange rate movement.
Flag is a pattern on a technical analysis chart indicating situation when currency price goes up significantly, and after that moves in a narrow range for some time, and then falls rapidly.
Flat is a price which moves with no rises or falls.
Float Profit/Loss - amount of profit or loss on currently opened positions which is not fixed and is subject to change.
Floor Broker - a broker who takes part in trading on floor.
Forecast - Estimation of future trend of price movement, taking into account historical data of technical analysis and current macro-economic indicators.
Foreign Exchange - conversion operations of the foreign currency exchange.
FOREX - financial market where buyers and sellers carry out currency buying/selling transactions.
Foreign Currency is a currency of any foreign country which can be used as a medium of circulation in another country.
Forward Market - «forward» currency market where currency transactions are concluded at the prices set today, but at a future time specified in the contract.
Free Margin - trader’s funds on the deposit which are not used as a pledge to open positions.
Fundamental Analysis is a method of forecasting price changes which is built up on the analysis of the current economic situation.

G

G7 - are the most developed countries, including the USA, Japan, Great Britain, Germany, France, Italy and Canada, which meet periodically at summits to resolve the issues of the world economic development, «Big Seven».
Gap is a break on the price chart of technical analysis which is caused by the difference in opening price of a new day and the closing price the day before.
Greenback - «Greenback», dealer’s slang for the U.S. Dollar.
Gross Domestic Product (GDP) - aggregate value of goods and services produced in a country in a certain period of time.
Gross National Product (GNP) - gross domestic product plus income, gained from investments or work performed overseas.

H

Hedging - strategy which is used to reduce investment risks when urgent selling/buying transactions are concluded.
Hedgeable («hedgeability») - characteristic of a transaction when risk of changes in currency rate can be covered by hedging.
Hedge Funds - American Funds which use hedging instruments.
High/Low - respectively, the highest and the lowest currency prices during the current trading day.
Housing Starts and Permits - macro-economic index which shows the number of houses under construction and the number of construction permits.

I

IFO - business optimism index, calculated by the Institute of Economic Research in Germany.
Import/Export Prices - data on dynamics of prices for the U.S. imports/exports.
Indicator Only - quotes which contain information and which are not used for opening currency positions.
Indirect Quote - cost per unit of domestic currency indicated in the foreign currency units.
Indicator - data which gives information on the general state of economy or financial markets.
Industrial Production is an economic index, indicator of industrial production, which shows total output amount of national plants.
Initial Margin - value of initial deposit which shall be invested as a guarantee for transactions in the future.
Interbank Rates - currency rates set by large International Banks for the other large International Banks.
Interest is the payment for using the money borrowed as a loan.
Interest Rate is a sum of money which is credited or paid to a lender by a borrower for the use of money. It’s calculated as the ratio of the payment for the use of money to the credit total amount. For instance, if a lender (bank) requires a client to pay $90 a year for the credit of $1000, the interest rate will make 9% (90/1000 * 100%). The interest rate can vary as a result of inflation or change of The Federal Reserve’s policy.
Intraday - currency trading during one trading day.
Instant Execution - technology of instant transactions execution when streaming quotes are available in the online mode.
Inflation - rise of the general level of prices.
Investor - a holder of financial resources on whose behalf currency transactions are conducted at the currency market.

J

Jobless Claims - economic indicator, showing a number of the registered unemployed.

K

Kiwi - dealer’s slang for New Zealand Dollar.

L

Last - average value of the last bid and ask values; the price of the last transaction.
Leading Indicators - index of the leading macro-economic indicators.
Leverage - ratio between one’s own and borrowed money, used to conduct transaction.
Limit order - trader’s order to open short or long position when the price reaches the target level.
Liquidation - closure of a trader’s open currency position.
Liquid Currency - currency which can be bought or sold without restrictions at the world financial market.
Liquidity is the ability to easily sell or buy security or currency.
Long Position is currency purchase, when “buy” position is opened.
Loss - reduction in deposit amount due to losses.
Lot - the smallest indivisible volume of a selling/buying transaction, at the currency market.

M

Maintenance Margin - minimum amount on trader’s deposit necessary to maintain his open positions.
Margin is an insurance deposit which provides cover of possible losses of a marginal trade, and is used as a pledge.
Margin Call - a message from a dealing centre to a trader saying that it is necessary to increase funds on marginal account.
Margin Level - an indicator showing the state of a trader’s trading account.
Margin trading is currency trading supported by the margin pledge.
Market Maker - a large bank or financial company which has significant share of market operations and which exerts influence on the current level of currency rates.
Market Maker Spread is a difference between the currency buying and selling price, established by a market maker.
Market order - an order which is not limited either by time period, or by price and which should be performed immediately at the best current price.
Market Place - physical market; a trading place.
Market Price - the last market price at which a transaction was conducted.
Market Users - medium sized bank or financial company which uses current quotes established by market makers, for currency operations.
Minimum Equity - minimum amount which a client has on his account.
Momentum is a characteristic of a price movement; speed of change in currency price.

N

Net Position - total amount of currency for all open positions held by a trader.
Net Factory Orders - macro-economic indicator which shows the increase in a number of industrial orders.
Nonfarm payrolls - number of employees on the payroll (excluding agricultural sector).

O

Offer (or «ask») is the price at which a buyer is requested to make a purchase.
Old Lady is dealer’s slang name for the Bank of England.
Open order - orders for open positions which will be performed when a declared currency price is reached.
Open Position - a position where transaction results are not yet recorded.
Oscillator - a technical analysis tool utilized by the market, to predict the future course of a currency.
Order - trader’s order to a broker to conduct currency selling/buying transaction at a specified price.
Output Index - index of production volume output.
Oversold - a situation in the market which happens after a rapid and significant currency decline.
Overbought - a market situation which takes place after a rapid and significant currency rise.

P

Personal Income - economic data indicating changes in personal incomes of a country’s population.
Personal Spending - economic data indicating changes in spending of a country’s population.
Pips/Points - minimum movement in a currency price.
Pound - dealer’s slang indicating a Great British Pound (GBP).
Position - a number of opened “long” and “short” positions held by a trader.
PPI - index of producer prices (Producer Price Index).
Premium - determines the amount at which future prices will surpass spot prices.
Profit - amount gained as a result of trading operations.
Price Quotations - quotes of one currency price against another currency.
Program Trading - computerized trading system in which currency buy/sell signals are generated by a specially developed program.

Q

Quotation - the price of one currency, indicated in the units of another currency.

R

Resistance Level - a horizontal or inclined price level on the chart; upper limit of price fluctuation.
Range - difference between two prices.
Retail Price Index (RPI) - an indicator showing changes of retail prices in Great Britain.
Retail Sales - an indicator of the retail sales volume.
Retracement - correction of a trend, rollback of a trend for a certain value to an opposite direction, after which original movement is resumed.
RSI (Relative Strength Index) - technical indicator, which specifies oversold and overbought zones.
Roll-over - the way of transferring Stop-Loss orders to more favourable positions.

S

Sell - currency selling operation.
Scalping - prompt strategy of gaining profit with the help of insignificant changes of the currencies prices.
Short - open selling position.Short position - an open position for selling currency with the intention to buy it in the future at a lower price.
Spot - transaction which is carried out immediately but with the payment made within two days from the moment of its conclusion.
Spike - significant difference between subsequent quote and its previous value.
Spread - difference between buying and selling prices of the currency, indicated in points.
Sterling - dealer’s slang for the British Pound.
Square - result of trader’s transactions at which profit size is equal to the losses size.
Stop Оrder - currency buy or sell order when a specified price level is reached.
Stop Limit - pending orders; execution of the order is delayed by a dealer until the price at the market reaches the level, specified in the order.
Stop Loss - order to close positions to limit losses.
Swap - funds that are retained or added to a trader’s account for rollover to the next day.
Swap points - points calculated in advance for transferring open position to the next day with the help of swap operation.
Support Level - horizontal or inclined price level on the chart; upper limit of price fluctuation.
Swissy - dealer’s slang for Swiss Franc.

T

Technical Analysis is a method of forecasting future price direction with the help of price charts examination.
Take-profit - currency sell/buy order for the open position at a specified price to gain profit.
Tick - minimum one time change of a trading tool price, in the financial markets.
Tick chart - price chart built on the ticks values.
Thin Market - market with low liquidity.
Today’s High - highest price of a transaction today.
Today’s Low - lowest price of a transaction today.
Trader - a person who buys and sells currencies from his personal account.
Trade Balance - trade balance is the difference between export and import values over a certain period of time.
Trading - securities or currency trading.
Trailing-stop - order to minimize losses.
Trading platform - a set of software and hardware supporting trading in the market.
Transaction - an operation of opening and closing of a currency position.
Transaction Date - the date of currency transaction operation.
Transaction Cost - payment for buying or selling of a financial tool.
Trend - a term of technical analysis, indicating general direction of the price movement.
Trend Line - straight line on a price chart drawn across the minimum values (in case of ascending trend) or across maximum values (in case of descending trend).

U

Unemployment - macro-economic indication which shows unemployment rate (in percentage against total number of able-bodied population).
Uptrend - ascending price trend, “bullish” trend.
Uptick - new price quote which is higher than previous price.

V

Volatility - the speed at which price moves.
Value Date - the date when transaction terms are implemented.
Volumes chart is a bar chart that shows the volume of conducted transactions.
Volume - activity level of currency trading.

W

Wholesale Prices is a macro-economic index of changes in wholesale prices.
Wholesale Trade is a macro-economic index of changes in wholesale sales.
Wage Index is a macro-economic index of data on wages.

Y

Yard means a billion US Dollars, in dealer’s slang.
Yours means "sold".

Z

ZEW - The Center of European economic research – non-commercial research institute founded in1990, 

Market Hours

Market Hours

Forex Market is running  24-hour in a day.
The forex market running into four major trading sessions: the New York session, the Tokyo session, the London session, and the Sydney session. Below are tables of the open and close times for each session:

Summer (April - October)

Time Zone	EDT	GMT
Sydney Open Sydney Close	6:00 PM 3:00 AM	10:00 PM 7:00 AM
Tokyo Open Tokyo Close	7:00 PM 4:00 AM	11:00 PM 8:00 AM
London Open London Close	3:00 AM 12:00 PM	7:00 AM 4:00 PM
New York Open New York Close	8:00 AM 5:00 PM	12:00 PM 9:00 PM

Winter (October - April)

Time Zone	EST	GMT
Sydney Open Sydney Close	4:00 PM 1:00 AM	9:00 PM 6:00 AM
Tokyo Open Tokyo Close	6:00 PM 3:00 AM	11:00 PM 8:00 AM
London Open London Close	3:00 AM 12:00 PM	8:00 AM 5:00 PM
New York Open New York Close	8:00 AM 5:00 PM	1:00 PM 10:00 PM

Money Management

There are Many rules of good money management

Take small percentage of Risk upon your total account

Why it is important?
The main idea of the whole trading process is to survive! Survival is the first idea to making  money.
One should clearly understand that good traders are, first of all, skillful survivors. The skills of surviving become a vital "must know" requirement to keep own Forex trading accounts "alive" and be able to make profits.
Let's to  look at the example that shows a difference between risking a small percentage of capital and risking a larger one. In the worst case scenario with ten losing trades in a row the trading account have to suffer this much:

Trades Account balance Risking 2% of total account per trade 1 Start — 5000 100 2 4900 98 3 4802 96 4 4706 94 5 4612 92 6 4520 90 7 4430 89 8 4341 87 9 4254 85 10 4169 — 17% of the account has been lost

Trades Account balance Risking 10% of a total account per trade 1 Start — 5000 500 2 4500 450 3 4050 405 4 3645 364 5 3281 328 6 2953 295 7 2658 265 8 2392 239 9 2153 215 10 1938 — over 60% of the account has been lost

We can see  there is a big difference between risking 2% and 10% of the account balance per trade. A trader who has made 10 trades risking only 2%, in bad time conditions would lose only 17% of his investment. The same trader who had been exposing 10% of the balance per trade would end up losing over 60% of his initial investment. So we can see that a money management is so need to manage in Forex Trading.

A practical example of applying money management rules:

Risking no more than 2-3% of the total account per trade... How does it work in practice?
Let's use an example to understand it.
We have opened a trading account of $1000 USD with a broker and got 20:1 leverage. So, now we have leveraged ourselves to $20 000 USD to begin trading with.
More money means a higher trading power. Correct. But, the higher the trading power, the higher the risks; and when we talk about risks we talk about a real account value which will decrease with every loss sustained during trading.
So, when we say risking no more than 2-3% of a total account value we mean the real account value — which is $1000 USD in our case.
Now, let's start trading and do the math.
Let's say, we have decided to risk 2% of the account in each trade.
$1000 x 2% = $20 USD.
This means that when the price goes against us, we will need to be out of the trade once we are $20 dollars down.
Ok, time to trade. Our trading power measures $20 000 USD (thanks to our leverage).
What will happen if we try to trade them all at once: for one $20 000 dollar trading lot order our Forex broker gives us a pip value of $2 dollars. This means that with each pip gained we will have +$2 USD in our pocket. But this also means that with each pip lost our real account will shrink by $2 dollars.
Since we can afford to lose only $20 dollars in one trade, we'll exiting a trade once the market makes... -10 pips! Yes, only 10 pips is required this time to reach our 2% limit.
10 pips * $2 USD per 1 pip = $20 dollars, which is our 2% account limit according with the money management rule we've chosen to follow.
Now, let's try to trade a $10 000 dollar position. The pip value for this position size will be $1 USD.
The math goes as follows:
we can stay in trade until market makes -20 pips against us. Yes, this time we can sustain a bigger market shift.
If we decrease our trading lot to $5000 USD, our sustainability will raise to -40 pips against our trade. (The pip value for $5000 dollar lot will be $0.50 cents).
And so on.
As you can see, with the money management rule in place our real account is under control. And even if leverage allows trading larger positions, the risks should be always under control.

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What is Leverage?

A big amount of people interested to getting money in a quick and easy way. The largest financial market of Forex offered opportunities for them, Forex market to be more precise. However many Forex trader understand that without theoretical and practical experiences it is not easy.You have to start  trade by demo accounts before real forex account. Because without Forex acknowledgement it will be fail at time.
You have to know what Forex leverage is can become a powerful advantage every new FOREX trader.To use to earn few bucks at first and then perfecting strategy of FOREX trading applying easily the most basic and required knowledge concerning Forex market.

Foremost let's focus on the definition of leverage in Forex. It stands for a great opportunity offered for online traders (not only Forex can offer this but stocks market as well) which can provide success in the FX market and can also bring disappointment leading to a trader's bankruptcy sometimes.
Applying of FX leverage can be rather useful only if one is quite aware of possible risks this tool can bring. Leverage embodies a sort of an approach for trading with other trader's money so no wonder this method has its lacks and risks to lose everything. Many people find this opportunity very advantageous at the very beginning but then understand that Forex leverage can serve as a double-edged sword. Severe guarantee  forms its main lack.

Many new traders suppose that Forex leverage serves as a trick and not quite legal which scammers use because the idea of trading other's people money seems too fantastic to be true. Nevertheless, leverage of the forex market really does it and legitimately so you don't have to worry about this. Take it as buying of a house with a mortgage and then returning money to a bank. Just imagine how many people would stay homeless without such a great opportunity a housing market offers?

Why then this opportunity can't be applicable according to the financial market of Forex or stocks as well? The only difference is that Forex leverage provides a trader with a required mortgage. In order to render a mortgage guarantee the trader's deposit fund is used.

Forex leverage is based on the following scheme of work: a FX broker gets a credit (which is usually higher than deposit) basing on a trader's deposit letting in such way a trader open much larger positions for trading and logically get more profits if a deal is successful. Commonly a FX trader having one thousand of dollars as a deposit can trade within the range of one hundred thousand dollars of a base currency in his chosen for trading currency pair. In such way typical Forex market leverage equals 1:100.

The most helpful aspect of using leverage is in the opportunity for trading within the margin and that is when proficient FX traders can apply Forex exchange leverage offer as they like. Taking into account FX leverage of no more than 1:15 and price movements a skillful trader can gain a lot of money

Speculation Of Forex

Speculation Of Forex

A important thing to about the forex market is that while commercial and financial transactions are part of trading volume, most currency trading is based on speculation.
In other words, most trading volume comes from traders that buy and sell based on intraday price movements.
The trading volume brought about by speculators is estimated to be more than 90%!
The scale of the forex speculative market means that liquidity - the amount of buying and selling volume happening at any given time - is extremely high.

 

This makes it very easy for anyone to buy and sell currencies. From the perspective of an investor, liquidity is very important because it determines how easily price can change over a given time period. A liquid market environment like forex enables huge trading volumes to happen with very little effect on price.
When the forex market is relatively very liquid, the market depth could change depending on the currency pair and time of day.
In  the trading sessions we can see  how the time of your trades are affect the currency pair you are trading.

Why The Dollar is King in Forex Market

Why The Dollar is King in Forex Market

                        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 roughly 62% of the world's official foreign exchange reserves! Because almost every investor, business, and central bank own it, they pay attention to the U.S. dollar. There are also other reasons why the U.S. dollar traded a huge quantity in the forex market: • The United States economy is the LARGEST economy in the world. • The U.S. dollar is the reserve currency of the world. • The United States has the largest and most liquid financial markets in the world. • The United States has a super strong political system. • The United States is the world's sole military superpower. • The U.S. dollar is the medium of exchange for many cross-border transactions.

Market Size and Liquidity

                  Besides  other financial markets like the New York Stock Exchange, the forex spot market has neither a physical location nor a central Location.
The forex market is considered an Over-the-counter (OTC) or "Interbank", market due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.
This means that the spot forex market is spread all over the globe with no central location. They can take place anywhere.
The forex  Over-the-counter (OTC) market is the biggest and most popular financial market in the world, traded globally by a large number of individuals and organizations.
In the OTC market, participants determine who they want to trade with depending on trading conditions, attractiveness of prices, and reputation of the trading counterpart.
 Belowing chart shows the ten most actively traded currencies.
The dollar is the most traded currency, taking up 84.9% of all transactions. The euro  is second at 39.1%, the yen is third at 19.0%.

 We can See The chart above that how much the U.S. dollar is traded in the forex market

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