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CFD and forex trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.


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Forex broker


What is a forex broker?


A forex broker is a financial services company that provides traders access to a platform for buying and selling foreign currencies.


Forex is short for foreign exchange. Transactions in the forex market are always between a pair of two different currencies.


A forex broker may also known be as a retail forex broker or a currency trading broker.


Understanding the forex broker


The foreign exchange market is by necessity a global and 24-hour market.


The clients of a forex broker include retail currency traders who use these platforms for speculation on the direction of currencies. Their clients also include large financial services firms that trade on behalf of investment banks and other customers.


Any individual forex broker firm will handle only a small portion of the volume of the overall foreign exchange market.


Key takeaways



  • Forex, or foreign exchange, trading is primarily between pairs of currencies of the nations that are represented in the G10.

  • The clients of forex traders are currency speculators or investors for large institutional clients.

  • Interested investors have a number of choices among forex traders online.


The role of a forex broker


Most foreign exchange transactions are between pairs of the currencies of the 10 nations that make up the G10. The nations and their currencies include the U.S. Dollar (USD), the euro (EUR), the pound sterling (GBP), the japanese yen (JPY), the australian dollar (AUD), the new zealand dollar (NZD), the canadian dollar (CAD), and the swiss franc (CHF).


Most brokers allow customers to trade in other currencies, including those of emerging markets.


Using a forex broker, a trader opens a trade by buying a currency pair and closes the trade by selling the same pair. For example, a trader who wants to exchange euros for U.S. Dollars buys the EUR/USD pair. This amounts to buying euros using U.S. Dollars.


To close the trade, the trader sells the pair, which is equivalent to buying U.S. Dollars with euros.


If the exchange rate is higher when the trader closes the trade, the trader makes a profit. If not, the trader takes a loss.


Opening a forex account


Opening a forex trading account these days is quite simple and can be done online. Before trading, the forex broker will require a customer to deposit money into the new account as collateral.


Brokers also provide leverage to customers so they can trade larger amounts than they have on deposit. Depending on the country the trader is trading from, that leverage can be 30 to 400 times the amount available in the trading account.


High leverage makes forex trading very risky and most traders lose money attempting it.


How forex brokers make money


Forex brokers are compensated two ways. The first is through the bid-ask spread of a currency pair.


For example, when the euro-U.S. Dollar pair is priced as 1.20010 bid and 1.20022 ask, the spread between these two prices is .00012, known as 1.2 pips. When a retail client opens a position at the ask price and later closes it at the bid price, the forex broker will collect that spread amount.


Secondly, some brokers charge additional fees. Some charge a fee per transaction or a monthly fee for access to a particular software interface or fees for access to special trading products such as exotic options.


The forex industry is regulated by the commodity futures trading commission and the national futures association.


Competition among forex brokers is currently intense and most firms find they must eliminate as many fees as possible in order to attract retail customers. Many now offer free or very small trading fees beyond the spread.


Some forex brokers also make money through their own trading operations. This can be problematic if their trading creates a conflict of interest with their customers. Regulation has curtailed this practice.


Regulation of forex brokers


The industry is regulated by the commodity futures trading commission (CFTC) and the national futures association (NFA).


Anyone considering opening a forex account can research the available brokers through the NFA website or through investopedia's broker reviews.



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What is forex? Forex trading explained


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The foreign exchange market, or forex (FX) for short, is a decentralized market place that facilitates the buying and selling of different currencies. This takes place over the counter (OTC) via the interbank market instead of on a centralized exchange.


Without knowing it, you have probably already participated in the foreign exchange market by ordering imported shoes, or more obviously, buying foreign currency when on vacation. Traders are drawn to forex for several reasons, including:



  • The size of the FX market

  • A wide variety of currencies to trade

  • Differing levels of volatility

  • Low transaction costs

  • 24 hour a day trading during the week



This article will benefit traders of all levels. Whether you are brand new to forex trading or looking to build on your existing knowledge, this article seeks to provide a solid foundation to the foreign exchange market.


The forex market explained


In a nutshell, the foreign exchange market works like most other markets in that it is subject to demand and supply. Using a very basic example, if there is a strong demand for the US dollar from european citizens holding euros, they will exchange their euros into dollars. The value of the US dollar will rise while the value of the euro will fall. Keep in mind that this transaction only affects the EUR/USD currency pair and will not for example, cause the USD to depreciate against the japanese yen .


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What M oves the F orex M arket?


In reality, the above example is only one of many factors that can move the FX market. Others include broad macro-economic events like the election of a new president, or country specific factors such as the prevailing interest rate, GDP, unemployment, inflation and the debt to GDP ratio, to name a few. Top traders make use of an economic calendar to stay up to date with these and other important economic releases that can move the market.


What M akes F orex so A ttractive?


The foreign exchange market allows large institutions, governments, retail traders and private individuals to exchange one currency for another and takes place via the interbank market (between banks).


The benefit of having forex trade between global banks is that forex can be traded around the clock (during the week). As the trading session in asia comes to a close, the european and UK banks come online before handing over to the US. The full trading day ends when the US session leads into the asian session for the following day.


What makes this market even more attractive to traders is that it is by far the most liquid market in the world, with an average daily trading volume of $5.1 trillion according to BIS triennial survey 2016. This means that traders can easily enter and exit positions as there are many willing buyers and sellers for foreign exchange.


What is forex trading and how does it work?


Many people wonder how to make money trading forex . Fortunately, the basics behind forex trading are quite straight forward. If you think the value of a currency is going to go up (appreciate), you buy the currency. This is known as going “long”. If you feel the currency is going to go down (depreciate), you sell that currency. This is known as going “short”.


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There are essentially two types of traders in the foreign exchange market: hedgers and speculators . Hedgers are always looking to avoid extreme movements in the exchange rate. Think of big conglomerates like exxon and how they look to reduce their exposure to foreign currency movements.


Speculators, on the other hand, are risk seeking and always looking for volatility in exchange rates to take advantage of. These include large trading desks at the big banks and retail traders.


Reading a F orex Q uote


All traders need to understand how to read a forex quote as this is will determine the price you enter and exit the trade. Looking at the currency quote below, the first currency in the EUR/USD pair is known as the base currency, which is the euro, while the second currency in this pair (the USD) is known as the variable or quote currency.


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For most FX markets, prices are offered up to five decimals but the first four are the most important. The number to the left of the decimal point indicates one unit of the variable currency, in this example, it is the USD and therefore is $1. The following two digits are the cents, so in this case 13 US cents. The third and fourth digits represent fractions of a cent and are referred to as pips.


It’s key to note that the number in the fourth decimal place is known as a ‘pip’ . Should the EUR depreciate against the USD by 100 pips, the new sell price will reflect the lower price of 1.12528 as it will cost less in USD to buy 1 euro.


Why trade forex?


Trading forex has many advantages over other markets as explained below:



  1. Low transaction costs: typically, forex brokers make their money on the spread provided the trade is opened and closed before any overnight funding charges are applied. Therefore, forex trading is cost effective when weighed up against a market like equities, which attracts a commission charge.

  2. Low spreads : bid/ask spreads are extremely low for major FX pairs due to their liquidity. When trading, the spread is the initial hurdle that needs to be overcome when the market moves in your favor. Any additional pips that move in your favor is pure profit.

  3. More opportunities to profit : forex trading allows traders to take speculative positions on currencies going up (appreciating) and going down (depreciating). Furthermore, there are many different forex pairs for traders to spot profitable trades.

  4. Leverage trading: trading forex involves the use of leverage . This means that a trader need not pay the full cost of the trade but instead only put down a fraction of the cost. This has the potential to magnify your profits but also your losses. At dailyfx we suggest a disciplined approach to risk management by restricting your effective leverage to 10 to one or less.



New to forex trading? We have a comprehensive guide designed with you in mind to learn the basics of trading.


Key forex trading terms to takeaway


Base currency : this is the first currency that appears when quoting a currency pair. Looking at EUR/USD, the euro is the base currency.


Variable/quote currency: this is the second currency in the quoted currency pair and is the US dollar in the EUR/USD example.


Bid: the bid price is the highest price that a buyer (bidder) is prepared to pay. When you are looking to sell a forex pair this is the price you will see, usually to the left of the quote and is often in red.


Ask: this is the opposite of the bid and represents the lowest price a seller is willing to accept. When you are looking to buy a currency pair, this is the price you will see and is usually to the right and in blue.


Spread : this is the difference between the bid and the ask price which represents the actual spread in the underlying forex market plus the additional spread added by the broker.


Pips/points : A pip or point refers to a one digit move in the 4th decimal place. This is often how traders refer to movements in a currency pair, i.E. GBP/USD rallied 100 points today.


Leverage: leverage allows traders to trade positions while only putting up a fraction of the full value of the trade. This allows traders to control larger positions with a small amount of capital. Leverage amplifies gains AND losses.


Margin: this is the amount of money needed to open a leveraged position and is the difference between the full value of your position and the funds being lent to you by the broker.


Margin call : when the total capital deposited, plus or minus any profits or losses, dips below a specified level (margin requirement).


Liquidity: A currency pair is considered to be liquid if it can easily be bought and sold due to there being many participants trading the currency pair.


Free resources and guides to learn forex trading



  • If you are just starting out on your trading journey it is essential to understand the basics of forex trading in our free new to forex trading guide.

  • We also offer a range of trading guides to supplement your forex knowledge and strategy development.

  • Our research team analysed over 30 million live trades to uncover the traits of successful traders . Incorporate these traits to give yourself an edge in the markets.

  • Traders often look to retail client sentiment when trading popular FX markets. Dailyfx provides such data, based on IG client sentiment

  • The forex market has evolved over centuries. For a summarised account of the most important developments shaping this $5 trillion a day market read our h istory of f orex article.


Dailyfx provides forex news and technical analysis on the trends that influence the global currency markets.



Forex d


Here you’ll find forex explained in simple terms. If you’re new to forex trading, we’ll take you through the basics of forex pricing and placing your first forex trades.


‘forex’ is short for foreign exchange, also known as FX or the currency market. It is the world’s largest form of exchange, trading around $4 trillion every day. This exceptional liquidity ensures reliable pricing even at high volumes and enables the tightest possible dealing spreads. When you trade forex your trading costs are comparatively low, and you can easily go long or short of any currency.


Forex explained


The aim of forex trading is simple. Just like any other form of speculation, you want to buy a currency at one price and sell it at higher price (or sell a currency at one price and buy it at a lower price) in order to make a profit.


Some confusion can arise as the price of one currency is always, of course, determined in another currency. For instance, the price of one british pound could be measured as, say, two US dollars, if the exchange rate between GBP and USD is 2 exactly.


In forex trading terms this value for the british pound would be represented as a price of 2.0000 for the forex pair GBP/USD. Currencies are grouped into pairs to show the exchange rate between the two currencies; in other words, the price of the first currency in the second currency.


Some commonly traded forex pairs (known as ‘major’ pairs) are EUR/USD, USD/JPY and EUR/GBP, but it is also possible to trade many minor currencies (also known as ‘exotics’) such as the mexican peso (MXN), the polish zloty (PLN) or the norwegian krone (NOK). As these currencies are not so frequently traded the market is less liquid and so the trading spread may be wider.


Forex trading spread


Like any other trading price, the spread for a forex pair consists of a bid price at which you can sell (the lower end of the spread) and an offer price at which you can buy (the higher end of the spread). It is important to note, however, for each forex pair, which way round you are trading.


When buying, the spread always reflects the price for buying the first currency of the forex pair with the second. So an offer price of 1.3000 for EUR/USD means that it will cost you $1.30 to buy €1. You would buy if you think that the price of the euro against the dollar is going to rise, that is, if you think you will later be able to sell your €1 for more than $1.30.


When selling, the spread gives you the price for selling the first currency for the second. So a bid price of 1.3000 for EUR/USD means that you can sell €1 for $1.30. You would sell if you think that the price of the euro is going to fall against the dollar, so you can buy back your €1 for less than the $1.30 you originally paid for it.


Calculating your profit


Take another example. Suppose the spread for EUR/GBP is 0.8414-0.8415. If you think the price of the euro is going to rise against the pound you would buy euros at the offer price of 0.8415 per euro. Say in this case you buy €10,000 at a cost to you of £8415.


The spread for EUR/GBP rises to 0.8532-0.8533 and you decide to sell your euros back into pounds at the bid price of 0.8532. The €10,000 you previously bought is now therefore sold for £8532. Your profit on this transaction is £8532 minus the original cost of buying the euros (£8415) which is £117. Note that your profit is always determined in the second currency of the forex pair.


Alternatively, suppose in the first instance you think the price of the euro is going to fall, and you decide to sell €10,000 at the original bid price of 0.8414, for £8414.


In this case you are right and the spread for EUR/GBP falls to 0.8312-0.8313. You decide to buy back your €10,000 at the offer price of 0.8313, a cost of £8313. The cost of buying back the euros is £111 less than you originally sold the euros for, so this is your profit on the transaction. Again your profit is determined in the second currency of the forex pair.


Why trade forex?


As forex is traded on exchanges across the globe, from tokyo to london to new york, you can take a position 24 hours a day throughout the trading week. Currency values are extremely sensitive to macroeconomic forces, so there are always trading opportunities.


Intertrader provides two different vehicles for trading forex: spread betting and cfds. Both of these products allow you to speculate on the movements of currency markets without making a physical trade, but they operate in slightly different ways.


With spread betting you stake a certain amount (in your account currency) per pip movement in the price of the forex pair. So for instance you might buy (or sell) £10 per pip on USD/JPY, to make £10 for every pip the US dollar rises (or falls) against the japanese yen. Forex traders have been using spread betting to capitalise on short-term movements for many years now. Find out more about spread betting.


With cfds you buy or sell contracts representing a given size of trade. So you might decide to buy 1 contract of GBP/USD, which (with intertrader) represents a trade of £10,000. Your profit or loss is calculated in the second currency, in this case US dollars, and then converted (if necessary) into your account currency. Find out more about cfds.


Either way you don’t have to provide the full currency value to open your position. Instead you put down a margin deposit, which is a fraction of the full value. And you don’t actually buy or sell any currency: you are opening a speculative position on the change in value of the forex pair. Your profit or loss is realised when you close your position by selling or buying.


You can use MT4 or the intertrader web-based platform, and trade a huge range of equities, indices, commodities and more on the same account. Trade forex with intertrader and you’ll get:



  • Fractional pip pricing – we quote forex to an extra decimal point to help you sharpen your profit

  • Free trading tools including forex analysis, technical research and live squawk

  • 100% market-neutral execution on all our markets




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Forex d


Here you’ll find forex explained in simple terms. If you’re new to forex trading, we’ll take you through the basics of forex pricing and placing your first forex trades.


‘forex’ is short for foreign exchange, also known as FX or the currency market. It is the world’s largest form of exchange, trading around $4 trillion every day. This exceptional liquidity ensures reliable pricing even at high volumes and enables the tightest possible dealing spreads. When you trade forex your trading costs are comparatively low, and you can easily go long or short of any currency.


Forex explained


The aim of forex trading is simple. Just like any other form of speculation, you want to buy a currency at one price and sell it at higher price (or sell a currency at one price and buy it at a lower price) in order to make a profit.


Some confusion can arise as the price of one currency is always, of course, determined in another currency. For instance, the price of one british pound could be measured as, say, two US dollars, if the exchange rate between GBP and USD is 2 exactly.


In forex trading terms this value for the british pound would be represented as a price of 2.0000 for the forex pair GBP/USD. Currencies are grouped into pairs to show the exchange rate between the two currencies; in other words, the price of the first currency in the second currency.


Some commonly traded forex pairs (known as ‘major’ pairs) are EUR/USD, USD/JPY and EUR/GBP, but it is also possible to trade many minor currencies (also known as ‘exotics’) such as the mexican peso (MXN), the polish zloty (PLN) or the norwegian krone (NOK). As these currencies are not so frequently traded the market is less liquid and so the trading spread may be wider.


Forex trading spread


Like any other trading price, the spread for a forex pair consists of a bid price at which you can sell (the lower end of the spread) and an offer price at which you can buy (the higher end of the spread). It is important to note, however, for each forex pair, which way round you are trading.


When buying, the spread always reflects the price for buying the first currency of the forex pair with the second. So an offer price of 1.3000 for EUR/USD means that it will cost you $1.30 to buy €1. You would buy if you think that the price of the euro against the dollar is going to rise, that is, if you think you will later be able to sell your €1 for more than $1.30.


When selling, the spread gives you the price for selling the first currency for the second. So a bid price of 1.3000 for EUR/USD means that you can sell €1 for $1.30. You would sell if you think that the price of the euro is going to fall against the dollar, so you can buy back your €1 for less than the $1.30 you originally paid for it.


Calculating your profit


Take another example. Suppose the spread for EUR/GBP is 0.8414-0.8415. If you think the price of the euro is going to rise against the pound you would buy euros at the offer price of 0.8415 per euro. Say in this case you buy €10,000 at a cost to you of £8415.


The spread for EUR/GBP rises to 0.8532-0.8533 and you decide to sell your euros back into pounds at the bid price of 0.8532. The €10,000 you previously bought is now therefore sold for £8532. Your profit on this transaction is £8532 minus the original cost of buying the euros (£8415) which is £117. Note that your profit is always determined in the second currency of the forex pair.


Alternatively, suppose in the first instance you think the price of the euro is going to fall, and you decide to sell €10,000 at the original bid price of 0.8414, for £8414.


In this case you are right and the spread for EUR/GBP falls to 0.8312-0.8313. You decide to buy back your €10,000 at the offer price of 0.8313, a cost of £8313. The cost of buying back the euros is £111 less than you originally sold the euros for, so this is your profit on the transaction. Again your profit is determined in the second currency of the forex pair.


Why trade forex?


As forex is traded on exchanges across the globe, from tokyo to london to new york, you can take a position 24 hours a day throughout the trading week. Currency values are extremely sensitive to macroeconomic forces, so there are always trading opportunities.


Intertrader provides two different vehicles for trading forex: spread betting and cfds. Both of these products allow you to speculate on the movements of currency markets without making a physical trade, but they operate in slightly different ways.


With spread betting you stake a certain amount (in your account currency) per pip movement in the price of the forex pair. So for instance you might buy (or sell) £10 per pip on USD/JPY, to make £10 for every pip the US dollar rises (or falls) against the japanese yen. Forex traders have been using spread betting to capitalise on short-term movements for many years now. Find out more about spread betting.


With cfds you buy or sell contracts representing a given size of trade. So you might decide to buy 1 contract of GBP/USD, which (with intertrader) represents a trade of £10,000. Your profit or loss is calculated in the second currency, in this case US dollars, and then converted (if necessary) into your account currency. Find out more about cfds.


Either way you don’t have to provide the full currency value to open your position. Instead you put down a margin deposit, which is a fraction of the full value. And you don’t actually buy or sell any currency: you are opening a speculative position on the change in value of the forex pair. Your profit or loss is realised when you close your position by selling or buying.


You can use MT4 or the intertrader web-based platform, and trade a huge range of equities, indices, commodities and more on the same account. Trade forex with intertrader and you’ll get:



  • Fractional pip pricing – we quote forex to an extra decimal point to help you sharpen your profit

  • Free trading tools including forex analysis, technical research and live squawk

  • 100% market-neutral execution on all our markets




Forex market trading hours


Olivia richman

Contributor, benzinga

Want to jump straight to the answer? The best forex broker for most people is definitely FOREX.Com


The foreign exchange market, or forex, covers over-the-counter trading of currencies from all over the world. Forex determines foreign exchange rates for every currency, from the philippine peso to the guatemalan quetzal. The foreign exchange market is where investors can buy, sell and exchange currencies simultaneously in hopes that one currency will strengthen against the other.


Just like buying and trading stocks, one of the first things you should do to start trading on forex is to find the right broker for you. A brokerage firm will help you make successful trades so you can start making a profit. Check out some brokers we recommend that specialize in forex.


The four main exchanges


There are 4 major forex exchanges located throughout various time zones: london, new york, sydney and tokyo. Having these international time zones helps the forex market stay open for 24 hours since trades are conducted over a network of computers as opposed to 1 physical exchange at a certain time. Even if a currency closes at a certain rate, that’s the rate at the time that particular market closed. The currency can be traded around the world even after closing hours of a particular exchange.


New york hours: 8 a.M. To 5 p.M. EST


Tokyo hours: 7 p.M. To 4 a.M. EST


Sydney hours: 5 p.M. To 2 a.M. EST


London hours: 3 a.M. To noon EST


Most important forex market times


One thing you might have noticed about the 4 market hours above is that they overlap at certain times. Those overlapping times — when 2 markets are open simultaneously — is the most important time to make a move. That’s because the trading volume greatly increases, adding volatility — the extent and rate at which equity or currency prices change. When it comes to the forex market, that high-risk environment makes for greater payoff opportunities once you get the hang of it.


Until your mastery, it could be a bit of a risk. According to a 2014 citibank study, 30% of retail forex traders break even or do better during these busy times. That means 70% of traders and investors are losing money. It’s a good idea to experiment with mock forex trades to see how it works before jumping into the mad money exchange.


Once you think you’re ready, here’s the most important forex market times to keep in mind:


New york and london exchanges open8 a.M. To noon EST
tokyo and sydney exchanges open7 p.M. To 2 a.M. EST
tokyo and london exchanges open3 a.M. To 4 a.M. EST


When are the best times to trade forex?


The best time to trade in the forex market is 8 a.M. To noon EST when the new york and london exchanges are both open and active. Interestingly enough, these 2 trading centers account for more than 50% of all forex trades. That makes this overlapping 4 hours a bit of a madhouse, but that means bigger profits if you’re successful.


While it’s important to keep these overlapping times in mind when trading currency, there are some variables to keep on your radar to ensure you’re making smart moves. For example, even if you can trade U.S. Currency when new york is closed, you’ll get the best liquidity for this currency during the open market hours. If you have a particular currency in mind, you should most likely trade while the local exchange is open, avoiding unknown market factors that could negatively impact valuations you’re unaware of.


News releases are another factor that shape investors’ decided value on a currency’s long-term prospect. You’ll want to keep track of retail sales figures, unemployment rates, gross domestic product and many other factors to properly plan for possible outcomes. Keep in mind that sudden news can have a major impact on the forex market while you’re asleep or at work.


Our advice is to maintain a consistent schedule for your trades. See what works best for you and pinpoint some important times. This can be when 2 markets are overlapping or when announcements are made.





So, let's see, what we have: securely access and manage your web trading account 24 hours a day, 7 days a week. At forex d

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