LONDON, August 9, 2012 /PRNewswire/ --
The foreign exchange market, commonly referred to as 'forex', is one of the most traded in the world, with a daily turnover in excess of US$4 trillion.
To put this into perspective, the New York Stock Exchange's daily turnover is approximately US$50 billion. Now you can start to understand why the global forex market is the biggest in the world.
But what makes up the foreign exchange market, why is it so popular and how can you trade it?
Below, we offer you an insight into the market, what you can trade and how you can take a position for only a small initial deposit with a City Index forex trading account.
Forex Trading Tips: What is Forex?
Foreign exchange - also known as forex or simply FX - is the act of exchanging one currency for another at an agreed exchange price on the over-the-counter (OTC) market.
As discussed above, the forex market is the world's most popular with traders - seeing an average turnover in excess of US$ 4 trillion every day.
The forex market is available to trade through City Index's range of forex trading platforms 24-hours a day from Sunday evening through to Friday night.
Forex Trading Tips: How to Trade Forex
Currencies are always quoted in pairs, with the value of the first currency in the pair traded against the value of the second currency in the pair. When trading through a City Index forex trading account, you will speculate on whether the first currency in a currency pair, such as EUR/USD, will rise (appreciate) or fall (depreciate) against the second currency in that pair.
Using the EUR/USD as an example, if you believe euro will depreciate against the US dollar - you go short and sell. In the event you are correct and the value of the euro moves in favour of your trade, you will profit in line with every pip the currency depreciates against the US dollar.
Alternatively, if you believe that euro will appreciate against the US dollar - you go long and buy. As above, if the value of the euro moves in favour of your trade then you will profit with every pip the currency appreciates the US dollar.
Forex Trading Tips: Manage your Risk
Volatility in the forex markets can open up numerous opportunities to speculate and profit from small price movements.
However, there are a number of risks involved with trading forex.
Consider the EUR/USD example above - had you been wrong and the euro moved against your trade, you could have incurred significant losses.
Furthermore, as a margined product you do not own the underlying market. This could mean losing more than your initial deposit in the event currency prices moves against your trade.
In order to limit losses, a range of risk management tools - including Stop Loss Orders - are available through the City Index forex trading platform.
Start Trading Forex
To start trading forex across a range of trading platforms - including mobile and tablets - you can apply for a forex trading account through the City Index website.
Read More Forex Trading Tips
If you found this article helpful, you may want to read more just like this. You can access a range of forex trading tips, guides and articles through the Forex Trading section of the City Index website.
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. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.
We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk for details.
Spread betting, CFD trading and forex trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
SOURCE City Index