What is Forex (FX) and How does Forex Trading Work?

Trading forex involves buying one currency and selling another simultaneously. Through careful analysis, traders predict the potential direction of currency prices and attempt to capture gains based on price fluctuations. There is no centralised exchange for forex trading. Rather, it takes place electronically or online, between networks of global computers. The market is open 24 hours a day, 5 days a week.

MetaTrader 5 are the world’s most popular forex trading platforms offering 70+ currency pairs along with a wide range of metals, commodities, and indices from global exchanges.

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Forex Trading

  • you should have firsthand experience with the object being reviewed;
  • The Forex markets are open 24 hours a day, 5 days a week
  • Trade on tight raw spreads from 0.0 pips
  • Leverage options up to 500:1
  • Access 70+ currency pairs including the GBPUSD, AUDUSD & EURUSD
  • MT4 and MT5 platforms on desktop and mobile
  • No price manipulation
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    What is a Base and Quote Currency in Forex?

  • Currencies are denoted in 3lettered ISO codes. Examples of how major currencies are denoted are USD (US dollar), AUD (Australian dollar), EUR (Euro), JPY (yen) and GPB (British Pound).
  • In foreign currency trading, currencies are quoted in pairs. When you see a currency pair, the first currency is called the base currency and the second currency is the quote currency or counter currency. For instance, say the EUR/AUD is trading at 1.6163. This means to buy 1 unit of Euro, you will need $1.6163 Australian dollars.
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    Forex Majors, Minors and Exotics

    Majors

    Major currency pairs have the tightest spreads.

    EUR/USD: Euro/US Dollar (aka Fiber)

    GBP/USD: British Pound/US Dollar (aka Cable)

    USD/JPY: US Dollar/Japanese Yen (aka Ninja)

    USD/CHF: US Dollar/Swiss Franc (aka Swissy)

    CAD/USD: Canadian Dollar/US Dollar (aka Loonie)

    AUD/USD: Australian Dollar/US Dollar (aka Aussie)

    NZD/USD: New Zealand Dollar/US Dollar (aka Kiwi)

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    Minors

    Then comes a category of minor currency pairs, otherwise known as cross-currency pairs. They are called so because they do not include the US Dollar. So, to convert one into the other, the US Dollar will need to act as a mediating currency.

    EUR/GBP: Euro/British Pound (aka Chunnel)

    EUR/AUD: Euro/Australian Dollar

    CHF/JPY: Swiss Franc/Japanese Yen

    GBP/JPY: British Pound/Japanese Yen (aka Gopher)

    GBP/CAD: British Pound/Canadian Dollar.

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    Exotics

    Exotics can include a major currency with an emerging market currency. Trading in exotics is considered risky, since they tend to have low liquidity, wider spreads and political instabilities in these countries can make these currencies volatile.

    Some examples are:

    EUR/TRY: Euro/Turkish Lira

    USD/HKD: US Dollar/Hong Kong Dollar

    AUD/MXN: Australian Dollar/Mexican Peso

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