What is Forex?
Forex, or Foreign Exchange (also abbreviated as FX) is a global decentralised financial market for trading currencies. Forex eclipses the stocks, bonds and binaries markets, with an estimated $7 trillion US dollars in volume traded each day. It is an exciting market to trade for both first time and experienced traders, as unlike share market, the Forex market is open 24 hours a day (with the exception on weekends).
At the most fundamental level, when a trade is placed on the foreign exchange markets, you intend for the currency to move in the direction you desire; either up or down, relative to another currency.
For example, if a trader believes the Euro (EUR) is going to increase in value against the US dollar (USD), they could place a trade to buy the EUR/USD currency pair. If the Euro rises, the trader would make a profit; if it drops the trader would incur a loss. Conversely, if the Euro was going to decrease in value, the trader could place a trade that would benefit from that price movement.
The MetaTrader 4 trading platform makes trading simple, as it provides access to trading tools and analytical resources. If you are new to the Forex markets, we recommend opening a demo account before starting with a live account. New traders should spend time familiarising themselves with the movement of the Forex market, developing their education in regards to the basic principles of trading and conduct trial trading all within demo account, where there is no risk or potential loss of funds. This will allow you to focus on building a trading strategy to approach the currency markets in a disciplined manner.
Benefits of Trading Forex
The Market is Open 24/5
With different market opening hours around the world in major trading hubs such as: New York, London, Tokyo, Sydney and many more, you can trade currency 24 hours a day, 5 days a week. Some market times cross over and as one Major market closes, there is always another open. This generally suits traders who work during the day as they’re able to trade at home in the evenings. It also means you don’t experience overnight gaps in the market. These only sometimes occur over the weekend once the markets are closed.
Forex is Low Cost
When you trade Forex, instead of paying a commission like you would with shares, you pay a very small mark-up to the price called the Spread. Typically, the spread is only a fraction of a cent for each dollar you trade. Its also down to the trader when it comes to the position size they trade. Berndale provides the ability to trade micro lots of 0.01 on all accounts (Market position size of $1000). This means you can keep not only your costs low but also your risk, and only trade at 0.10 cents per 1 pip of movement.
You Can Start Small
Unlike other investments, you can start small with Forex. Your profits won’t be diminished by high commission charges typically seen with stock trading. Berndale’s entry level STP account lets traders start with just A$25 and zero commissions. When you are ready, you can easily move up to a higher account level tier offering raw ECN pricing to further benefit your Forex trading strategy.
Trade More With Less
Leverage is sometimes known as a Margin Account, and these are very common in the foreign exchange market. Leverage is the ability to trade in amounts that are higher than your total deposit held. For instance you may have deposited an amount of $5,000 and be allowed to trade a positional size on the market of $500,000. The leverage offered at Berndale Capital is from 1:1 to 1:500, this means that you are able to trade up to 500 times your equity value. Naturally, the greater the leverage used, the greater the earning ability, although at a higher risk.