The answers to the frequently asked questions about the Forex market are presented in these FAQs:
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It is a very common and frequently asked question(s) for Forex.
The foreign exchange market, also referred to as forex or FX, is the global currency trading market. It is the largest, most liquid financial market in the world.
When trading forex, currencies are traded in pairs. For example, the Euro and the U.S. dollar (EUR/USD) or the Pound and the Japanese yen (GBP/JPY).
It isn’t owned by anyone in particular. Forex is an interbank market, meaning that its transactions are conducted only between two participants — the seller and the buyer. So as long as the current banking system will exist, Forex will be here. It isn’t connected to any specific country or government organization.
Forex market is open from 22:00 GMT Sunday (opening of the Australian trading session) till 22:00 GMT Friday (closing of the US trading session).
With some Forex brokers, you can start trading Forex with as little as $5. Usually, the minimum amount varies from $100 to $10,000 ($100,000 and more for interbank trading). But I wouldn’t recommend starting trading with anything with any capital less than $100.
Normally, you cannot. The broker will not allow you to lose more than you have in your trading account. It will simply close your losing position when the resulting account balance becomes too close to zero. The loss that is bigger than the trader’s deposit is a direct loss of the Forex broker. It is in the broker’s best interests to prevent such losses. To secure themselves, brokers implement a stop-out level (usually about 20%), so the biggest losing position will be closed once (equity / used margin) × 100% becomes equal to or less than this level.
In rare cases, a slippage or significant price gap may put the trader’s balance into negative territory. However, brokers rarely pursue traders to refund negative account balances.
If you don’t want (or it isn’t possible) to install new software to start trading Forex, then a good option for you would be using a web-based trading platform. You can browse our Forex brokers list to find those that support such platforms. Here is a shortlist of brokers that offer web-based trading options:
When you open a trade, you do it at the Ask price for buy trades or at the Bid price for sell trades. If you were to close the trade, the opposite price is used &mmdash; the Bid price to close a Buy trade and the Ask price to close a Sell trade. The same applies to calculating the trade’s floating profit or loss. Hence, when opening a new trade, it always starts in the red because of the Bid/Ask spread. Therefore, every trader must first beat the spread for their positions to become profitable.
A currency pair consists of a base currency and a quote currency (or counter currency). It is a way to display and price one currency against another.
Currency pairs are conventionally shown as two abbreviated currency names, separated by a slash. For example, with the” “EUR/USD” currency pair, the euro (EUR) is the base currency and the U.S. dollar (USD) is the quote currency.
A minor currency pair is one that does not contain the US dollar. These pairs are also known as “cross-currency” pairs or simply as “crosses“.
Examples of minor currency pairs include EUR/GBP, EUR/AUD, and GBP/JPY.
The most actively traded crosses are derived from the euro (EUR), Japanese yen (JPY), and the British pound sterling (GBP).
Slippage occurs when you wish to enter the market at a certain price, but due to the extreme volatility during these events, you actually get filled at a far different price.
Slippage is the difference between the expected fill price and the actual fill price. If the actual fill price is better than the expected fill price, this is referred to as “positive slippage“. If the actual fill price is worse than the price requested, this is known as “negative slippage“.
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