The currency market is the largest in the world, much bigger than stocks and commodities, and has a daily turnover of $6 trillion. Many investors and traders prefer to trade in global currencies along with commodities or stocks for various reasons. It is very easy to make money in currency trading and this is the reason many beginners attempt to trade in foreign currency.
What is forex?
The foreign exchange market (Forex, FX, or currency market) is a globally distributed, decentralized or over-the-counter (OTC) market for the trading of currencies. Unlike the stock, commodity or futures markets, the foreign exchange market is not controlled by any central governing body. All members trade with each other.
Who are the market makers in forex?
Multinational companies and financial institutions provide liquidity in the market by buying and selling currencies. There are a lot of forex market makers, but the major ones are the banks. These banks are HSBC, Deutsche Bank, Citibank, etc.
How are currency exchange rates determined?
Currency exchange rates are driven by the economics of demand and supply. When the demand for a currency (e.g., USD) rises (as more people are buying it/exchanging their own currencies for USD), the currency appreciates in value or gains additional value relative to the other currencies, as the buyers are willing to pay a specific price for them. Consequently, the exchange rate rises.
What is a Forex account?
If a trader or an investor wants to trade in currencies then opening a forex account with a licensed and regulated forex broker is mandatory. Forex accounts give investors and traders the platform and access to trade all major currency pairs online through a trading terminal. A forex account also stores the profit and loss as the exchange rate moves.
What are the types of forex accounts?
There are mainly two types of forex accounts: demo and real. A demo account is used for training purposes and back-testing of trading strategy.
Real TRADING ACCOUNTS are further classified according to the minimum deposit requirements from various brokers.
Example: These are the five different account types provided by Trade World Market.
| Features | Beginner’s a/c $100 | Trader’s a/c $1500 | Pro Trader’s a/c $7000 | Advance Trader’s a/c $15000 | Exclusive Trader’s a/c $30000 |
| Minimum deposit | $100 | $1,500 | $7,000 | $15,000 | $30,000 |
| Segments | FX(Majors)/Cryptos/Commodities | FX(Majors)/Cryptos/Commodities/CFD Index | FX(Majors)/Cryptos/Commodities/CFD Index/Bonds/ETF/Shares | FX(Majors)/Cryptos/Commodities/CFD Index/Bonds/ETF/Shares | FX(Majors)/Cryptos/Commodities/CFD Index/Bonds/ETF/Shares |
| Leverage | max upto 1.500 | max upto 1.500 | max upto 1.300 | max upto 1.200 | max upto 1.100 |
| Spread | As Low as 1 pip (floating) | As Low as 1 pip (floating) | From 0 (floating) | From 0 (floating) | From 0 (floating) |
| Trading Platform | MT4 Desktop and Mobile Access | MT4 Desktop and Mobile Access | MT4 Desktop and Mobile Access | MT4 Desktop and Mobile Access | MT4 Desktop and Mobile Access |
| Margin Call | 60 | 60 | 50 | 40 | 30 |
| Min Vol | 0.01 | 0.01 | 1 Standard (Lot) | 1 Standard (Lot) | 1 Standard (Lot) |
| Commission | $9 Per standard Lot | $8 Per standard Lot | $7 Per standard Lot | $6 Per standard Lot | $4 Per standard Lot |
Read about “How to grow a small forex account?“
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