Forex (FOReign EXchange) refers to a decentralized global marketplace where all the world’s currencies are bought, traded, and sold against one another in pairs, establishing the exchange and conversion rates between global decentralized markets and large institutional banks, affecting international trade, investments and reflecting macroeconomic tendencies within the markets. In other words, the Foreign Exchange market is the “place” where global currencies are traded.
Trading opportunities
Forex is the largest, most liquid market in the world with an average daily trading volume of almost $5 trillion USD. Due to its global nature, it undergoes an almost continuous operation. Since it is one of the largest markets, finding a buyer when you’re selling and a seller when you’re buying is much easier than in other markets.
The Forex market is active 24 hours a day, 5 days a week with participants active from all over the world, most of them trading from the main global financial centers such as London, New York, Tokyo, Hong Kong, and Singapore. As the Asian trading session ends, the European markets open, which are then followed by the North American sessions, and on it goes, continuously.
Forex Pairs
The forex market consists of a range of forex pairs. Each pair represents the exchange of one currency into another currency.
For example,
the pair EUR/USD represents an exchange of euro into US dollars. Currency values are always relative, as the price of one currency can only be determined in another currency.
PIP
PIP (Percent in points) is known as the unit of measurement to express the change in value between two currencies.
A pip is a number value. In the Forex market, the value of the currency is given in pips. One pip equals 0.0001, two pips equal 0.0002, three pips equals 0.0003 and so on.
A pip is usually the last decimal place of a price quote. If EUR/JPY moves from 1.1050 to 1.1051, that .0001 USD rise in value is ONE PIP.
Spread
Spreads are based off the Buy and Sell price of a currency pair. It is simply defined as the price difference between where a trader may purchase or sell an underlying asset.
Every market has a spread and so does Forex. It is imperative that new Forex traders become familiar with spreads as this is the primary cost of trading between currencies.
In AlteumX, spreads are represented in pips.
It is important to remember that spreads are variable meaning they will not always remain the same and will change sporadically. These changes are based on liquidity, which may differ based off of market conditions and upcoming economic data.
Lots
In the past, forex was only traded in specific amounts called lots, or the number of currency units you will buy or sell.
The standard size for a lot is 100,000 units of currency. Now forex can also be operated with mini, micro, and nano lot sizes that are 10,000, 1,000, and 100 units.
CFD TRADING WITH FOREX ON ALTEUMX
In a Forex market, you can trade a currency based on what you think its value is heading. If you think a currency will increase in value, you can buy it. If you think its value will decrease, you can sell it.
CFD trading allows you to speculate on the movements of currency markets without making a physical trade. With CFDs, you buy or sell contracts representing a given size of the trade. Find out more about CFDs.
AlteumX Forex Operating hours
For Forex markets, we strongly recommend verifying forex trading hour clock. As forex is traded on exchanges across the globe, from Tokyo to London to New York, you can take a position 24 hours a day during business days.
Business Day: means a day when the clearing banks in the City of London are open for business, excluding Saturday, Sunday and public holidays.
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