New to Forex

This section is directed at those new to the foreign exchange (forex) market. The forex market gives the traders the options to buy and sell specific currency pairs. It is important to become familiar with this market’s unusual and unique attributes. Commissions are not charged on each individual trade as the forex broker is renumerated through the difference between the buy and the sell price. This is commonly known as the “spread”. Below are some guidelines that will assist you to start trading with ADVANCED-FOREX – your introduction to the largest and most liquid market on earth.

(Foreign Exchange, FX) What is FOREX?

Traders wanting to make speculative transactions on the exchange rate between two currencies. We at ADVANCED-FOREX offer you the best and most efficient online forex trading services and forex trading platforms. Rates will often be influenced by such things as:

• World economics
• Political events
• Currency rate differentials
• Other factors including extreme weather conditions (hurricanes), acts of terror etc.

With more than 3.2 trillion dollars changing hands daily, Forex trading is the largest marketplace in the world, and so making it one of the most attractive and lucrative markets.

How does the foreign exchange market work?

Transactions that are made on the forex market are easy: the procedures are the same as that of any market so changing to currency trading is straightforward for the majority of traders. Online forex trading allows you to buy and sell currencies against each other and speculate on the differences in exchange rates.

Buying/Selling - B/S

Opening a position (i.e. placing an order to sell –will give you a profit if the exchange rate lowers) you have to choose the amount (i.e. 100.000 EURUSD) from the drop down menu on the forex trading platform and then click the mouse on the sell currency button: SELL. To place an order to buy, you do exactly the reverse. You will receive an instant notification on your forex trading platform as soon as you have opened your position in the market. Closing an open position is just as easy, simply do exactly the opposite of the initial operation – in our case buy the 100.000 EURUSD back. Other order types also exist to open or close a position under a certain condition.

How does the B/S system work?

With any market, for each currency pair, there are two prices. The difference between this currency pair is called the spread. The spread is measured in points or pips – lowest decimal figure in a currency rate. For a EURUSD a pip equals 0.0001 (or 10 dollars on 100.000), for EURJPY a pip equals 0.01 (or 1000 yen on 100.000). More information on P/L calculation on the following page: profit and loss.

Forex currencies quotation system

• Currencies are quoted in pairs, for example – EUR/USD or USD/JPY.
• Each currency pair has a base currency (first of the pair) and a counter currency (second of the pair).
• The "basis" for all purchases and sales is known as the base currency. For example, if you buy EUR/USD then you acquire Euros and sell Dollars. This transaction is made if you expect the Euro to rise against the Dollar. Although this method is used rarely, a currency pair may also be quoted as USD/EUR.
• Each transaction must have 2 sides – a buy and a sell (or a sell and a buy).
• Without closing the first position it is impossible to buy 100.000 EUR/USD and then exchange it for another currency pair (i.e.: EUR/JPY).

It is important to note that no actual physical delivery of a currency will be made. Banks and exchange companies, which specialize in low-rate currency conversions, are available for this purpose.

Forex market working hours

In comparison with all other markets the online forex trading market is unique, as it is based on "spot" transactions. This is due to the fact that trading takes place 24 hours a day, 5 days a week ADVANCED-FOREX trading platform works from Sunday 23:00 to Friday 23:00 CET). Once financial centres are open, banks and other organizations exchange currencies in different parts of the world for various purposes.

Therefore, trading never ceases, apart from a short weekend break. Christmas or New Year’s Eve could precipitate early closings.

Forex trading margins

The payment in cash for purchasing market shares is not a margin deposit, as many traditional traders suggest. The margin is, in actual fact, a guarantee or a trust deposit. Losses are therefore protected during a deal, allowing traders to open positions on amounts that far exceed their account limits therefore increasing their buying power. ADVANCED-FOREX offers a 1% margin (or 1:100 leverage. This allows you to control 100 times your deposit in the real market.

Should, during the course of trading, the funds in the account fall below the specified margin, your positions will be closed automatically without prior notice. Therefore the forex traders account will not be overdrawn even under volatile, fast-changing market conditions. The formula for calculating margins is as follows: (account balance + profit/loss / open position = the margin

Rollover of positions (swap)

Unlike other online brokers we have a complete explanation of applied “cost of carry” on behalf of the market or the customer on open positions held overnight. This overnight cost of carry is presented as a simple flat fee either paid or charged on a customer's account. This process allows for very simple statements and a vastly increased transparency as we do not modify the original price of the position entered into by the customer. You can find a more detailed explanation on the following page: overnight positions.

How to start trading Forex?

Open a live account if you feel ready to trade in the real market using our forex trading platforms
OR
Open a demo account on one or both of our forex trading platforms and choose which suits you best.

• Specify the period of time you wish to trade for.
• Determine the currency pairing that you feel most comfortable with.
• Choose the tradable amount you feel best suits your financial situation.
• Before opening a position you will need to take into account the amount of profit you wish to make or what losses you are prepared to accept. Depending on this you place your stop and/or limit orders.
• Open your position or place an entry order.

Keep a close watch on significant news events and technical indicators which you can consult inside your trading station or from third party sources (find out more about different types of analysis on the following pages:

• Technical vs fundamental analysis.
• Forex technical indicators.
• Forex fundamental analysis.

Also please consult the following pages for more information or contact customer support.

Learn more about foreign exchange

• Foreign exchange glossary
• Spreads and margin requirements
• Execution methodology
• Trading examples
• Forex order types
• Phone trading terminology
• Trading with a strategy

 

Privacy Policy

Advanced-forex is a professional financial intermediary, which our counter parties are directly regulated by the Swiss Federal Department of Finance, Anti Money Laundering Control Authority. As forex specialist, Advanced-forex provides only currency trading via highly professional forex trading software. All customers are aware that this information or any part thereof has been prepared without taking account of your objectives, financial situation and/or needs. This information is not intended as personalized investment advice and does not constitute a recommendation. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. The analysis is based on the information which Advanced-forex finds reliable and accurate, but Advanced-forex does not assume any responsibility for any material nor for the transactions made on the basis of the information or the estimates of the analysis. Advanced-forex cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct, indirect and/or consequential loss arising from any use of this information, document or its content. All opinions and estimates constitute Advanced-forex analysis as of the data and are subject to change without notice. Advanced-forex does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. Past performance is not a reliable indicator of future performance.