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What is Foreign Exchange?
The Foreign Exchange market, more commonly known as Forex or FX, is a global market for the trading of currencies. This market determines foreign exchange rates for every currency.
The forex market is open 24 hours a day and 5 days a week.
the forex market?
Several key factors, including changes in interest rates, inflation, economic stability, the actions of central banks, and other global events which may affect an economy.
What are Currency Pairs?
A currency pair is a pairing of currencies where the value of one is priced relative to a fixed value of another.
For example, in the currency pair GBP/USD, it is the value of the US Dollar relative to the price of 1 British Pound. Here, GBP is the base currency and USD is the quote currency.
What are Major
Major currency pairs (“Majors”) are the most frequently traded and represent some of the world’s largest economies.
There are 7 major pairs: EUR/USD, USD/JPY, GBP/USD, USD/CAD, USD/CHF, AUD/USD, and NZD/USD.
Forex Trading Basic Terms:
Each pair has two prices i.e.,
Ask - the price for buying the base currency
Bid - the price for selling the base currency
Spread: the difference between the Bid & Ask
Leverage: A feature offered by the majority of brokers; it allows traders to trade a larger position than their account size would normally allow. Leverage in forex is like a “loan” that the broker gives the trader so that the trader has more capital to trade with than what he or she initially deposited.
It’s represented in the form of a ratio. For example, when your account leverage is 1:100, you can trade $10,000 of a currency by only depositing $100.
Therefore, to trade $100,000 (one lot), you only need to deposit $1,000. (Please note, this is just an example for illustrative purposes, not necessarily the leverage you will receive.)
What is a Pip?
"Pip" - An acronym for percentage in point or price interest point. A pip is the smallest whole unit change in an asset’s price.
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