Forex Trading Overview: An Easy to Follow Guide to Trading Forex

LONDON, March 21, 2012 /PRNewswire/ --

Forex trading is the act of simultaneously buying one currency, whilst selling another at an agreed exchange price with the aim of making a profit.

Foreign exchange is the most liquid market in the world, with an average volume of USD 4 trillion per day. When compared to the New York Stock Exchange, which has an average daily turnover of approximately USD 50 billion; it is clear to see just how popular forex is.

Forex, also known as foreign exchange, retail forex and simply FX- is also the largest financial market in the world.

This easy to follow guide offers you a comprehensive overview of why traders choose to trade the forex markets and the major currency pairs available to traders choosing a City Index forex trading account.

Why choose FX trading

The foreign exchange market and price movements are largely influenced by international trade and investment flows, and in particular the latter - price movements - are influenced by economic and political conditions, including interest rates, inflation, and political instability.

Currency prices constantly fluctuate in value against each other; opening up multiple trading opportunities for forex traders.

With this in mind, it is important to consider the impact that economic and political conditions have on currency prices, which are commonly short-term and follow market news and apply technical and fundamental analysis.

Major Forex Currency Pairs

A major currency pair is one of the most liquid currencies. For example, they are the most actively traded currencies in the world.

Major currency pairs make up around 85% of the total trading volume in the foreign exchange market.

With comparably tighter spreads than the lesser traded 'minor' currency pairs, the most traded currency is the EUR/USD.

Here are other examples of major currency pairs available through City Index:

• Euro vs. US dollar (EUR/USD)
• US dollar vs. Japanese yen (USD/JPY)
• British pound vs. US dollar (GBP/USD)
• Australian dollar vs. US dollar (AUD/USD)
• US dollar vs. Swiss franc (USD/CHF)
• US dollar vs. Canadian dollar (USD/CAD)

Summary

FX trading with City Index opens up multiple opportunities for traders wanting exposure to the largest financial market in the world.  

However, trading on margin carries high risk and may not be suitable for some investors. The possibility exists that you could lose some or all of your investments, including your initial deposits.

Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, CFD trading and, in the UK, financial spread betting.

SOURCE City Index