Forex Trading

Forex Trading Basics

Forex is short for foreign exchange. The forex market is a place where currencies are traded. It is the largest and most liquid financial market in the world with an average daily turnover of $6.6 trillion. The basis of the forex market is the fluctuations of exchange rates. Forex traders speculate on the price fluctuations of currency pairs, making money on the difference between buying and selling prices.

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What is Margin?

Margin is the amount of a trader's funds required to open a new position. Margin is estimated based on the size of your trade, which is measured in lots. A standard lot is 100,000 units. Margin allows you to trade with leverage, which allows you to place trades larger than the amount of your trading capital.

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What is Leverage?

Leverage is the ability to trade positions larger than the amount of capital you possess. For example, 1:100 leverage means that a trader who has deposited $1,000 can trade with $100,000. Although leverage lets traders increase their trade size and potential gains, it also magnifies potential losses.

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Types of Forex Orders

• Market Order: Buy or sell immediately at current market price
• Limit Order: Buy or sell at a specific price or better
• Stop Order: Buy or sell once price reaches a specified level
• Stop-Loss Order: Limit a trader's loss on a position
• Take-Profit Order: Close position at a specified profit level

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Risk Management

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