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Forex - What is it ?
The foreign exchange market is a global decentralized marketplace that determines the relative values of different currencies. Unlike other markets, there is no centralized depository or exchange where transactions are conducted. Instead, these transactions are conducted by several market participants in several locations. It is rare that any two currencies will be identical to one another in value, and it’s also rare that any two currencies will maintain the same relative value for more than a short period of time. In forex, the exchange rate between two currencies constantly changes
Forex - What happens when I trade it ?
Forex is a commonly used abbreviation for "foreign exchange," and it is typically used to describe trading in the foreign exchange market by investors and speculators.
For example, imagine a situation where the U.S. dollar is expected to weaken in value relative to the euro. A forex trader in this situation will sell dollars and buy euros. If the euro strengthens, the purchasing power to buy dollars has now increased. The trader can now buy back more dollars than they had to begin with, making a profit.
This is similar to stock trading. A stock trader will buy a stock if they think its price will rise in the future and sell a stock if they think its price will fall in the future. Similarly, a forex trader will buy a currency pair if they expect its exchange rate will rise in the future and sell a currency pair if they expect its exchange rate will fall in the future.
Why Trade Forex
Trading goes on all around the world during different countries’ business hours. You can, therefore, trade major currencies at any time, 24 hours per day. Since there are no set exchange hours, it means that there is also something happening at almost any time of the day or night.
Unlike many other financial markets, where it can be difficult to sell short, there are no limitations on shorting currencies. If you think a currency will go up, buy it. If you think it will fall, sell it. This means there is no such thing as a “bear market” in forex - you can make (or lose) money any time.
Most forex accounts trade without a commission and there are no expensive exchange fees or data licenses. The cost of trading is the spread between the buy price and the sell price, which is always displayed on your trading screen.
Because forex is a $4 trillion a day market, with most trading concentrated in only a few currencies, there are always a lot of people trading. This makes it typically very easy to get into and out of trades at any time, even in large sizes.
Because of the deep liquidity available in the forex market, you can trade forex with considerable leverage (typically 200:1). This can allow you to take advantage of even the smallest moves in the market. Leverage is a double-edged sword, of course, as it can significantly increase your losses as well as your gains.
As the world becomes more and more global, investors hunt for opportunities anywhere they can. If you want to take a broad opinion and invest in another country (or sell it short!), forex is an easy way to gain exposure while avoiding vagaries such as foreign securities laws and financial statements in other languages.
At APM we quote major foreign exchange (forex) currency pairs to four decimal places which allow us to be more accurate in our pricing offering FX traders the best possible spreads.
APM is proud to offer competitive spreads on all our forex currency pairs. On major pairs, such as the EUR/USD, spreads start at 3 pips.
The foreign exchange market operates round the clock five days a week, from Monday 00:01 (Server time) till Friday 23:59 (Server time). Our Customer Service Team is available 24 hours a day during the Market Hours for any inquiries you may have.
The time displayed in the Market Watch window of the MT4 platform is set at GMT +3 during US Summer Time and GMT +2 during US Winter Time.
APM can execute any MT4 forex order size starting from 0.1 lots or the equivalent of 10,000 of the base currency depending on your selected account type.
If a trade is kept open overnight, then there is a swap cost/income calculated on that position. The cost or income is calculated as the overnight interest rate differential between the two currencies plus the commission charged by the company on which the position is held, depending on the type of the position (long/short).
Margin Requirements and Stop Out levels
For all forex pairs, margin taken for each 1 lot is equivalent to $250.
Forced liquidation will be enforced for all open positions whenever equity to margin requirement ratio reaches 10% or lower.
At Friday’s end of market session, all accounts under 100% ( equity to margin requirement ratio ) with open position will have it’s open positions liquidated by means of LIFO ( Last In First Out ) in order to fulfil a 100% ratio.
All open positions at each end of day time will be charged with a storage fee called swap. Consult your MT4 terminal to see the valid swap charges. 3-day swap will be charged at Wednesday’s end of day.