Forex trading involves purchasing and selling currencies on the foreign exchange market. Currencies are traded in pairs; therefore, their price depends on how much each is worth against another currency pair. Find out the best info about forex robot.
The forex market operates 24 hours a day, five days a week across Europe, Australia and North America. As it can be highly volatile, traders should only trade with money that they can afford to lose.
Leverage
Leverage is an innovative trading tool that enables traders to control a more prominent trading position with a smaller capital outlay. This increases profit potential as gains are calculated based on trading volume rather than initial outlay. Unfortunately, increased risk also means increased losses.
People or businesses use leverage to make money by borrowing funds and investing them. For instance, a company could borrow to purchase additional equipment to increase output, expand into new markets, or use leverage in the stock market as an edge against its competition.
Your level of leverage depends on the margin requirement for the trade you’re engaging in. This requirement is usually expressed as a percentage of total exposure (notional value) that must be deposited to open an open position—this percentage represents your actual leverage ratio.
Example: With a deposit of $10,000 and trading one standard lot, the notional value is 100,000; thus, the actual leverage ratio would be 100:1. However, if your margin requirement is only 1%, then the actual leverage ratio will be lower; so always know and adhere to your margin requirements to avoid being subject to margin calls and potentially losing all your deposit money.
Spreads
Forex trading requires numerous skill sets, one of them being understanding spreads and their effect on trade profitability. A trader’s transaction costs play a large part in their potential profits for any given trade; higher spreads require them to earn more to break even.
Forex spread is the difference between the buy and sell prices of a currency pair, calculated by subtracting the asking price from the bid price and dividing by decimal points. A pip is the unit of measurement in forex trading and can be identified as being four digits after the decimal point.
When the spread widens, it is usually due to higher volatility or less liquidity in the market. This may happen at either end of a trading day—when Canadian and US markets close down for the night or during economic data releases that have the potential to impact currency pairs significantly.
Spreads may also widen when traders attempt to enter markets at meager prices. If their broker cannot instantly match up an interested buyer or seller for their order, requoting may result in higher or lower quotes than they initially requested.
Trading platforms
A critical factor in selecting a brokerage is its trading platform. A good broker should offer easy navigation and various tools that support your investment strategy. You should also easily access customer support and educational resources such as webinars or tutorials to help you develop as an investor.
Online trading platforms provide investors with an interface for buying and selling stocks, bonds, currencies, and other financial instruments online. There are two primary types of platforms used by investors to trade such assets: proprietary (developed by brokers themselves to offer unique trading products to clients) or third-party (produced by 3rd party providers for brokers to sell to their clients). Proprietary platforms tend to be expensive to develop but can easily be upgraded, while third-party solutions provide turnkey solutions designed by third-party providers and sold directly.)
A great trading platform should offer many features, from real-time quotes and advanced charting capabilities to order types such as market orders, limit orders, and stop-loss orders. Furthermore, it should support various payment methods and allow funds to move seamlessly between accounts.
Other features of trading platforms include news feeds and portfolio management tools. Some allow you to follow traders on the platform and trade alongside them; additionally, some trading platforms provide you with a detailed breakdown of trading costs such as commissions and transaction fees.
Customer service
Customer service is a crucial consideration when selecting a forex broker. Many traders wish to know whether their broker can respond promptly to their queries or if they must wait. Furthermore, customers may want to know whether or not automated assistance and chat functionality are offered.
Fxtrade’s online trading platform features two-way prices fed directly into its chat application, enabling customers to request FX prices for Spot, Forwards, Swaps, and NDFs using natural language text requests. Their BOT can understand multiple natural language requests and interpret them into either one- or two-way prices for trade.
The platform also enables users to set take-profit and stop-loss orders, linked with market and limit orders, for maximum flexibility in trading. A trader can choose whether their orders will be placed based on price or pips; all pertinent details regarding pip value and margin requirements will be displayed within their trade ticket.
