WHAT IS FOREX?
Forex (foreign exchange or FX) or currency trading, is where all of the world’s currencies are traded 24/5. FX trading allows you to exchange almost any currency with another, at an agreed-upon price.
There are many different factors that have the power to influence rising and falling currency exchange rates: changing world economies, political stability, inflation, interest rates, etc. Your objective as a Forex trader is to make profits from constant rate changes by speculating on future market movements.
The Forex market is open to everyone; from banks, governments and businesses to private investors and traders. FX is considered as a leveraged product (up to x200 on Alpha Financial’s platform). What it means is that you are able to trade with only a small portion of the total value of your trade and still be able to maximize your returns.
The SELL rate of the Euro against the US dollar (EUR/USD) is 1.05433 and the BUY rate is 1.05564. You predict that the EUR will strengthen against the USD, so you open a BUY position on an amount of 10,000.
10,000 x 1.05564 = 10,556.4
The contract is leveraged x50.
$10,556.4: 50 = $211.13
This means you need at least $211.13 (initial margin) in order to open this position.
EUR/USD then increases to 1.08739.
You manually close the position and earn:
1.08739 – 1.05564 = 0.03175
0.03175 x 10,000 = $317.5
Your profit is $317.5
At no point did you actually buy any Euros or sold any Dollars. You simply invested on the market performance of the currency pair.
WHY TRADE FOREX?
FX trading lets you speculate on movements of currency pairs while using quite a small amount of capital and without paying any hidden fees or commissions to a third party. Unlike other traditional forms of trading, there is no requirement to actually own the asset. This eliminates the need for any paperwork or contractual agreements with brokerage firms/banks. You can just register by providing your info, make a minimum deposit in your own segregated trading account and start trading.
Trading Forex with leverage gives you the ability to open a position while using only a fraction of its total value. Doing so allows you to control larger trade sizes and magnify your overall returns; your profits are calculated based on the overall amount of the trade.
Trading in Forex allows you to make profits from both rising and falling currency exchange rates. On top of that, the never-ending liquidity of this unique market guarantees dependable pricing at all volumes and lets you enjoy the lowest possible spreads.
You can immediately determine your exposure level by setting the “stop loss/take profit” parameters. This standard feature will automatically close any open positions if the price either drops or rises beyond a predetermined point.
- Up to 1/200 leverage
- Efficiency of your capital
- Trade on both rising and falling markets
- 24/5 availability
- Transparent and secure
- Risk management capabilities