Firms that provide currency traders with access to a trading platform that allows them to buy and sell foreign currencies. A currency trading broker, also know as a retail forex broker, or forex broker, handles a very small portion of the volume of the overall foreign exhange market. Currency traders us these brockers to access the 24 hours currency market.
In other financial markets, it would generally be required to have the full deposit of the amount that of which is traded. However, in the foreign exchange market, all that of which is required would be a margin deposit, with the remainder being granted by the broker. Usually, the amount of leverage provided is either 50:1, 100:1 or 200:1 but some brokers offer leverage up to 500:1 or even 1000:1
All currency trading is done in pairs. Unlike the stock market, where you can buy or sell a single stock, you have to buy one currency in the forex market. Next nearly all currencies are priced out to the fourth decimal point. A pip or percentage in point is the smallest increment of trade. One pip tipically equals 1/100 of 1%
Forex market is open 24 hours a day. It provides a great opportunity for traders to trade at any time of the day or night. However, when is seems to be not so important at the beginning, the right time to trade is one of most crucial points in becoming a succeful forex trader.
Currency Trading is the act of buying and selling different currencies of the world. The Foreign Exchange is the market that allows you to trade currencies in volume.
News trading involves trading around the time of a key news event, such as a major economic data release, and it generally does not involve taking overnight positions. News traders thrive on volatility, so they might establish forex positions just ahead of the news event and hold them through any movement thay may result. Alternatively, they might establish a position just after a news release has come out to take advantage of the wide exchange rate swings that can occur if the result differs significantly from the market's consensus.
Trend trading is a longer term trading strategy that often involves using technical analysis to identify if and in what direction a trend exists, and then determining suitable entry points. Trand traders generally take overnight positions (sometimes running a position for months until the trend concludes) and they will often use trailing stops to protect the profits on a winning trade. Trend traders also tend to prefer daily and weekly chart time periods for their technical analysis, and they use often use longer term chart patterns and fundamental analysis to yield trade ideas; Trend traders are relatively insensitive to the dealing spread , so they can trade in relatively illiquid currency pairs.
Swing trading involves establishing and then closing out trading positions based on the momentum of the underlying currency pair, usually as determined by appropriate technical indicators. Their trading focus is typically on near term exchange rate movements, with all positions closed out within from one to four days, so they do hold overnight positions. Their preferred chart time periods for typically one hour and daily intervals, and they often watch for chart patterns to give them trade ideas. Since swing traders can profit both from trends and corrections, they can show a higher rate of return from their trading activities compared with trend traders.