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Topic：
What is
forex?
Forex(Foreign Exchange) is the name given to the "direct
access" trading of foreign currencies. With an average
daily volume of $1.4 trillion, forex is 46 times larger
than all the futures markets combined and, for that reason,
is the world's most liquid market. In the past, forex
trading was limited largely to enormous money center
banks and other institutional traders. But in just the
past few years, technological innovations and the development
of online trading platforms, such as that used by Direct
Forex, allow small traders to take advantage of the significant
benefits of trading foreign currencies with forex.
How to start trading
?
If you're a trader now, or would like to become one, trading foreign currencies through Directforex has significant advantages over other types of trading.
For one thing, it's remarkably easy to get started. This is what you do. Open up a demo account with $10,000 worth of "virtual money" right now, and start playing around. You begin trading immediately, with zero risk, with live quotes, access to research, news and charts, and the same real-time profits and losses you would have if you were trading for real.
It's just like learning to ride a bike.
The best thing to do is just start doing it. Eventually, you
take the training wheels off and you ride for real. With forex,
that means putting money into a live trading account, and
trading for real. Or you can walk through a trade right now
and see how forex trading works within minutes.
Advantages of forex
Forex offers a number of advantages over other types of trading, including:
• Powerful leverage
The leverage in forex is greater than in most other trading vehicles. For a deposit of just $1,000, an investor can typically control $100,000 worth of a foreign currency.
• Limited risk
With Directforex, your risk is strictly limited. You can never lose more than you have in your account. This means you can never have a negative equity balance. You can also define and limit your risk with stop-loss orders, which are guaranteed* by Directforex on all orders up to $1 million in size.
* All stop-loss, limit and entry orders are guaranteed against slippage except in extraordinarily volatile market conditions. All quotes and trades are subject to the terms and conditions of the Client Agreement accessible through this website.
• Executable prices and Instantaneous Fills
With Directforex, you get instantaneous execution and total price certainty on all orders up to $1 million in size. This allows you to trade with confidence off real-time, two-way quotes. And this price policy applies to stop-loss and limit orders as well.
• 24-hour market
Forex is a 24-hour-a-day market that literally follows the sun around the world, from the U.S. to Australia and New Zealand to Hong Kong, the Far East, Europe and then back again to the U.S. The huge number and diversity of investors involved make it difficult even for governments to control the direction of the market. The unmatched liquidity,zero commission trading, and around-the-clock global activity make forex the ideal market to trade.
How it works Trading forex through Directforex is remarkably easy. Everything you need to trade can be found right here or on the Directforex Trading Platform. (Open up a live trading account right now… or a FREE demo account with $10,000 worth of virtual money.)
In the forex market, currencies are always priced and traded in pairs. You simultaneously buy one currency and sell another, but you can determine which pair of currencies you wish to trade. For example, if you believe the value of the Eurodollar is going to increase vis-a-vis the U.S. dollar, then you would buy the euro in the euro/U.S. dollar pair. The objective of forex currency trading is to exchange one currency for another in the expectation that the market rate or price will change so that the currency you bought has increased its value relative to the one you sold. If you have bought a currency and the price appreciates in value, then you must sell the currency back in order to lock in the profit. An open trade or position is one in which a trader has either bought/sold one currency pair and has not sold/bought back the equivalent amount to effectively close the position.
The first currency in the pair is referred to as the base currency, and the second currency is the counter or quote currency. The U.S. dollar, as the world's dominant currency, is usually considered the base currency for quotes, and includes USD/JPY, USD/CHF, and USD/CAD. This means that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The exceptions are the euro, Great Britain pound, and Australian dollar. These currencies are quoted as dollars per foreign currency.
As with most traded financial products, forex quotes include a "bid" and "ask." The ask is the price at which a market maker (Directforex) will sell (and you can buy) the base currency in exchange for the counter currency. The bid is the price at which a market maker (such as Directforex) is willing to buy (and you can sell) the base currency in exchange for the counter currency. The difference between the bid and the ask price is referred to as the spread. With Directforex, you get tight spreads reflected in our firm prices quoted to buy or sell each currency pair.
Low margin requirements The forex margin deposit is not a down payment on a purchase. Rather, the margin is a performance bond, or good faith deposit, to ensure against trading losses. The margin requirement allow you to hold a position much larger than your actual account value. Directforex' s online trading platform has margin-management capabilities that allows you to get up to 100:1 leverage. The trading platform performs an automatic pre-trade check for margin availability and will only execute the trade if you have sufficient margin funds in your account. The system also calculates the funds needed for current positions and displays this information to you in real time.
In the event that funds in your account fall
below margin requirements, the Directforex Trading Platform
will close all open positions. This prevents your account from
ever falling into a negative equity position even in a highly
volatile, fast-moving market.
In the spot forex market, trades must be settled
in two business days. For example, if you sell 100,000 euros
on Tuesday, you must deliver 100,000 euros on Thursday, unless
the position is rolled over. As a service to you, Direcforex
automatically rolls over all open positions — that is, exchanges
the trade forward to the next settlement date (two business
days) at 4 p.m. ET. The swap rates are determined at the
Interbank level and are tradable instruments. In any spot
rollover transaction, there is a difference in interest
rates between the two currencies that will be reflected
in the overnight "loan." If
the trader is long the currency with the higher interest rate
in the pair, you should gain on-the-spot rollover through the
premium relationship of that currency relative to the short
currency. The amount of the gain is determined by the interest
rate differential between the two currencies, and fluctuates
day-to-day with the movement of prices. For instance, on any
given day, the rollover can be $2 per lot for USD/JPY and $15
for GBP/JPY. Rollover fees are shown in dollars, and are posted
in the "interest column" on the Directforex Trading
Platform every day at 4 p.m. ET. For day traders who never
hold a position overnight, rollover will not affect trading.
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