FX Trading Guide To Trading Forex for New Traders

LONDON, March 15, 2012 /PRNewswire/ --

FX trading is the act of simultaneously buying one currency while selling another for the purpose of speculation. This over-the-counter (OTC) market, commonly referred to as foreign exchange, forex or simply FX, sees traders exchange one currency for another at an agreed exchange price.

Forex is one of the world's most traded markets, with an average turnover in excess of US$4 trillion daily, which when compared to the New York Stock Exchange - whose turnover is around US$50 billion daily - you can see how popular this particular market is.

In addition, it is one of the most liquid. As a result, forex market spreads tend to stay tight throughout most of the day, leaving traders safely in the knowledge that positions and orders can always be executed.

This is one of numerous reasons why new traders are attracted to trading forex. In the guide below, we look at other key features which traders, new and experienced, benefit from.

Trade FX 24-Hours a Day

With the ability to trade forex 24-hours a day, the forex markets are popular with an array of traders, offering them the exposure they so desire.

Trading from Sunday evening through to Friday night, trading follows the clock; opening on Monday morning in Wellington, New Zealand; progressing to Asia - spearheaded out of Singapore and Tokyo, before moving to London coming to a close New York on Friday night. 

Another attraction is that traders find the possibility of market gapping - when a market jumps from one level to the next without trading in between - is lessened.

Forex Leverage 

Foreign exchange is a leveraged product, requiring only a small percentage of the full value of your position as a deposit.

In turn, this means that the potential for both profit and loss is significantly higher than in traditional trading.

Forex prices

Some of the key factors that influence forex prices are: 

• Political and economic stability
• Monetary Policy
• Currency intervention
• Natural disasters (earthquakes, tsunamis etc)

Summary

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

In addition, trading forex offers a level of diversification, necessary to protecting against adverse movements in both the equity and bond markets.

It is important to remember; trading on margin carries high risk and the possibility exists that you could lose some or all of your investments, including your initial deposits, making it unsuitable for some investors.

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.

SOURCE City Index