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Forex trading is the world's most heavily traded market, with estimates of $6.6 trillion* in daily trades. Forex refers to foreign exchange, also known as currency trading. Believe it or not, the daily trading volumes of forex exceed that of commodities trading, stocks trading, indices trading, and cryptocurrencies trading combined. The forex market is decentralised. That means there isn't a single physical location where retail traders and institutional traders go to buy & sell forex. Thanks to brokers and dealers, forex trading takes place pretty much around the clock.
Every forex trade is made up of base currency and a quote currency. In the UAE for example, the
Emirati Dirham is known as the AED. This currency is pegged to the USD. The USD/AED currency pair
has two parts. The first currency in the pair is known as the base currency. The second currency in
the pair is known as the quote currency, or the counter currency. If the exchange rate of the
USD/AED currency pair is 1:3.6725, that means that $1 can be exchanged for the equivalent of 3.6725
If we reverse the currency pair to AED/USD, the exchange rate is 1:0.2723. That means that 1 AED can be exchanged for $0.2723. In this pair, the base currency is the AED and the quote currency is the USD. We always quote currencies to the fourth decimal point. This is known as a PIP (percentage in point), and it represents the smallest price movement in an FX pair. When you trade one currency pair for another, you're effectively buying one currency and selling the other currency in the same pair. You can also learn about Bonds.
When you buy the USD/AED, you buy the US dollar and sell the Emirati Dirham. When you sell the USD/AED, you sell the US dollar and buy the Emirati Dirham. Your decision to buy or sell forex is based upon macroeconomic variables. If the Federal Reserve Bank intends to raise interest rates, this would possibly strengthen US dollar. So, you buy the USD and sell the AED. If the Central Bank of the UAE decides to cut interest rates, you might decide to sell the AED and buy the USD.
Broadly speaking, there are 3 distinct categories of currencies that you can trade. These include the following:
|Israeli new shekel||ILS|
A CFD is a Contract for Difference. It is known as a derivative instrument. The price is derived
from the price of the underlying financial instruments. In this case, we are referring to
currencies. Xtrade.net offers competitive leverage forex CFDs. Think of leverage as magnified buying
power. For example, with
, you can enjoy leverage of 30:1 on your trades. For every $100 in capital, you can trade $3,000 in
Margin is also important with forex CFDs. It represents the percentage of the total amount that you need to pay upfront to open a trade. If the forex CFD trade is valued at $10,000, and leverage of 30:1 is available, you need to deposit $333.33. You can trade forex CFDs on the Xtrade WebTrader platform direct from your browser. Plus, you can trade on Android and iPhone using our mobile trading apps.
With forex CFDs, you don't need to trade in one direction. You can trade forex CFDs in rising or falling markets. If you believe that one currency in a pair will weaken, you can sell the pair. If you believe that one currency in a pair will strengthen, you can buy the pair. Positive expectations are known as bullish expectations. Negative expectations are known as bearish expectations. When you are bullish, you go long (BUY) the pair. When you are bearish, you go short (SELL) the pair. * Please take note that forex CFD trading is highly volatile. You stand to lose more than your initial deposit if a trade moves against you. You will be liable for the full value of the trade if your assessment is incorrect. The financial markets are inherently risky, and forex CFD trading is not suited to everyone.
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