What is Forex and how does it work?

Forex is an international currency market in which dozens of currencies are bought and sold. Traders invest in currency pairs, the price of which changes as a result of supply and demand. If a trader's forecast of the future price turns out to be correct, he receives a profit in the sum of the difference between the prices at the time of making the deal and its completion.

Forex terminology:

A broker is a legal entity that acts as an intermediary between the trader and the financial market. The broker provides technical tools for carrying out transactions and is a technical executor of clients' orders. The broker redirects the trader's orders to the liquidity provider or to the ECN platforms.

• A liquidity provider is an institutional bank or other legal entity that acts as a counterparty to the trades of clients.
  
  
• ECN Platform - a platform that connects buyers and sellers in Forex. Examples of platforms are Integral, and Currenex.
  
  
• Spread - the difference between buying and selling of asset, which also includes markup - markup, which is the broker's commission.
  
  
• Swap - charge for transferring the position to the next day. If the swap is positive and a deal is opened in its direction, the trader is credited with profit. This is the basis of the Curry-trade strategy.
  
  
• Order - order in the trading platform to open a deal. Orders can be market (immediate execution) and pending (triggered when the price reaches a specified level). Separate orders - stop-loss (insurance order), take-profit (closing the deal with profit at a specified level).
  
  
• Technical analysis - a set of tools for predicting the price on the basis of analysis of statistical regularities in the past. Technical analysis is a subdivision of graphical analysis, which includes the construction of resistance/support levels and patterns, i.e. candlestick patterns having a psychological base.
  
  
• Fundamental analysis is a set of tools for price forecasting based on macro- and microeconomic indicators. The strategy of trade "on news" is built on this type of analysis.
  
  
• Point - the minimum value of the asset price change.
  
  
• Point value - the currency value of a pip, which depends on the volume of a position, lot, and asset. The formula for calculating the pip value is different for various assets. For example, the point value for the EUR / USD pair at a lot of 0.01 is equal to 10 cents at 4-digit quotes.
  
  
• Volatility - it characterizes the speed and amplitude of price changes for a fixed period of time. For example, if the price of asset A has changed by 60 points in 1 day and the price of asset B has changed by 100 points, asset B has higher volatility.

Trading can be manual or automatic. Manual - trader searches for signals, and open and close deals at their own discretion. Automatic - transactions are opened by the robot (Expert Advisor), whose code contains the algorithm of manual strategy. The use of Expert Advisors allows us to save time and exclude the human factor.

Also, if you want to use all available trading tools to increase your capital as soon as possible - follow this link below, or contact us via live chat. Our experts will help you to choose the best strategy for success.