Foreign exchange, commonly known as ‘Forex’ OR ‘FX’, is the exchange of one currency for another at an agreed exchange price on the over the counter market. Forex is the world’s most traded market, with an average turnover in excess of US$4 trillion per day.
One of the key elements behind foreign exchange’s popularity is the fact that the forex markets are open 24 hours a day from Sunday evening through to Friday night. Trading follows the clock, opening on Monday morning in Wellington, New Zealand, before moving to London and then closing on Friday evening in New York.
One of the key benefits of being able to trade 24 hours a day helps to ensure that price gapping ( when a price jumps from one level to the next without trading in between) is less and ensures that you as a trader can take a position whenever you want, regardless of time.
Foreign Exchange is a leveraged (or margined) product, which means that you are only required to deposit a small percentage of the full value of your position to place a Forex trade. This means that the potential for profit, or loss, from an initial capital outlay is significantly higher than in traditional trading.
All foreign Exchange is quoted in terms of one currency versus another. Each currency has a base currency and a counter currency. The base currency is the currency on the left of the currency pair and the counter currency is on the right. In Forex trading, the difference between the BID and the ASK of the currency pairs is referred to as the spread. A usual spread on a Forex pair is typically 1 pip.
Here at H2O, we have a division dedicated solely to FX trading which is live 24 hours a day. As an added benefit of being a Forex client at H20, you gain full access to the research platform which houses up to date, live data relevant to helping you on your way to trading success.
Before trading Shares, Contracts for Difference, Spread bets or Foreign Exchange (ForEx or FX); please ensure you fully understand the risks involved. These products are notsuitable for all types of investor. The value of all investments can go down as well as up and when trading shares you may not get back the full amount of your investment. Specifically, trading in Contracts for Difference, Spread bets and FX carries a high degree of risk and is only for the more experienced investor. Leveraged products carry a high degree of risk to your capital, and in some circumstances you may be liable for a greater sum than your initial capital invested. You should be aware that due to the leverage involved losses can mount rapidly and substantially. You should only speculate with money you can afford to lose. Tax laws could be subject to change in the future. H2O Markets is authorised and regulated by the financial conduct authority FRN 511520. To view our full risk warning click here.