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The list of main asked questions and answers relating to trading, these way users of the website

can take basic information.

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FAQ

 

What is the Forex market?

 

The foreign exchange market is a global decentralized market for the trading of currencies. In terms of volume of

trading, it is by far the largest market in the world with the largest international banks being the main participants.

The foreign exchange market determines the relative values of different currencies.

Working through financial institutions, the market operates on several levels. Behind the scenes, banks turn to a

smaller number of financial firms known as “dealers/brokers” who are actively involved in large-scale foreign

exchange trading. Trades between foreign exchange dealers can be very large, involving hundreds of millions of

dollars. Because of the sovereign risk that arises when two national currencies are involved, Forex has little

supervisory entity regulating its actions.

 

Market participants

 

All operations on the financial Forex market are done via the system of financial institutions, such as: central banks,

commercial banks, dealers and brokers. Every Forex participant has its own volume of deals on the Forex market.

For example, central banks have the biggest turnover, exceeding hundreds of millions of US dollars per day.

Central banks of countries.

These banks regulate money and credit flows with instruments defined by law. The main functions of central

banks are the emission of money, implementation of monetary and credit policy and national currency policy.

 

Commercial banks

These are financial intermediaries that accept deposits from legal entities and private individuals, take advantage

of investing this money, return it to depositors, and open and operate bank accounts.

 

Brokers

Brokers are legal entities or private individuals that act as agents or negotiators in trading, representing the buyers

and sellers of securities or currencies. Brokers get a commission for fulfilling their clients’ orders.

 

Dealers

Dealers are companies or private individuals that operate on the market at their own expense and in their own

name, using their own money to buy and sell currencies or other assets.

 

What are the key advantages of the Forex market?

 

Superior Liquidity: Liquidity is what really makes the foreign exchange market stand out from other markets. There

are over 15 foreign exchange markets, which are by far the most liquid financial markets, dealing about one trillion

U.S. dollars on a daily basis. This ensures better trade execution and allows traders to easily open and close a

transaction. The superior liquidity also makes it possible to focus on only a few instruments as principal investments.

24-hour Market: One of the biggest advantages of Forex market transactions is that they are decentralized. The

Forex market operates in financial centers across the globe, starting a trading day in Australia and following the sun

through Hong Kong, Frankfurt, London and ending in New York.

Leverage: With the help of leverage Forex market trading provides much greater purchasing power than many other

markets.

For example, a trader uses 1:100 leverage, which means that only a deposit of 1,000 USD is required to open a

100,000 USD trade.

Low Transaction Costs: These costs vary from broker to broker, but they are usually relatively low . The most

common costs associated with trading are the spread and commission fees charged by the broker for each trade.

Low Minimum Investment: Forex requires less capital to start trading than any other financial market. You can start

well with up to 300 USD as a low initial investment, depending on the leverage provided by the broker. This is a

great advantage, allowing to keep the investors’ own capital to the lowest level.

 

Who sets the price on the Forex market?

 

Prices are set as a result of a variety of operations made between different counterparties: banks, financial and

insurance companies, investment funds and private investors.

 

What does ‘Forex broker’ mean?

 

The Forex broker operates as an intermediary between you and the market. In other words, in order to find a buyer

or seller for currencies, you can go to a broker and they match you up with either a prospective seller or prospective

buyer.

 

However, instead of just being the intermediary between you and another buyer or seller, they are also the

intermediary between you and what is called a “liquidity provider”.

 

What is a quote?

 

A currency pair quotation is the relative value of a currency unit against the unit of another currency in the foreign

exchange market.

 

What are the major currency pairs on Forex market?

 

The most traded currency pairs in the world are called the Majors, such as EUR/USD, GBP/USD, USD/JPY,

USD/CHF, etc. They involve the following currencies: euro, US dollar, Japanese yen, pound sterling, Australian dollar,

Canadian dollar, and the Swiss franc.

 

What is a ‘Lot’?

 

A lot is a transaction unit on the market. One standard lot contains 100,000 units of base currency. For example,

one standard lot of EUR/USD equals 100,000 EUR. Please note that on Cent accounts you trade cent lots, where

one cent lot equals 1,000 units of base currency. The minimum lot which can be opened on the Invest Moment form is 0.01.

 

What is a ‘Swap’?

 

This is a fee that the client has to pay to keep a position open overnight. From Wednesday to Thursday swaps are

calculated in triple size .

 

What is the level of order?

 

This is the price specified in the order.

Past performance is not necessarily indicative of future results. All investments carry risk and all investment decisions of an

individual remain the responsibility of that individual. There is no guarantee that systems, indicators, or signals will result in

profits or that they will not result in losses. All investors are advised to fully understand all risks associated with any kind of

investing they choose to do. Hypothetical or simulated performance is not indicative of future results.

 

RISK WARNING - TRADE RESPONSIBLY: Derivatives are leveraged products that incur a high level of risk and can result in the loss of all your capital and may therefore not be suitable for all investors. You should not risk more than you are prepared to lose and before deciding to trade, please ensure you understand the risks involved, take the level of your experience into consideration and seek independent advice if necessary. We strictly do not provide trading advice. To read our full risk disclosure statement, please click here

 

 

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