The amount of cash deposit required in a clients account in order to open a position or to maintain an open position. Margin is essentially collateral for a position. If the market moves against a customer’s position, the client will be requested to deposit additional funds through a “margin call.”
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WHAT IS THE PROCESS IN WHICH YOU EXECUTE TRADES?
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The majority of all Forex trades are made over electronic trading platforms connected to the Internet. Typically, a trader Installs and opens a trading platform on a computer. Then, the trader creates an opening transaction, which is an order to establish either a buy (Long) or sell (Short) position. As a general rule, a trade…
WHERE IS THE CENTRAL LOCATION OF THE FOREX MARKET?
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FOREX trading is not centralized on an exchange, as with the stock and futures markets. The Forex market is considered an Over the Counter (OTC) or “Interbank” market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.
WHAT ARE THE MOST COMMONLY TRADED CURRENCIES IN THE FOREX MARKETS?
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The most often traded or ‘liquid’ currencies are those of countries with stable governments, respected central banks, and low inflation. A large number of Foreign Exchange daily transactions involve trading the major currencies, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar.
WHEN IS THE BEST TIME TO TRADE THE FOREX MARKET?
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In our opinion, generally when a country’s banks and equity markets (stock, commodities, bond, etc.) are open. For instance, trading the Euro may be best from 1 a.m. Eastern Time through 9a.m. Eastern Time.
WHAT IS A PIP?
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PIP is an acronym for Price Interest Point. It is the smallest unit of a currency. It is the farthest digit to the right of a currency pair. Suppose the EUR/USD moves from 1.1400 to 1.1401, then it moved 1 pip which is equal to 0.0001. With currency pairs related to the Japanese Yen, a…
WHAT IS THE MARGIN REQUIREMENT TO MAKE A TRADE?
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The FOREX allows spot currency positions to be leveraged at various amounts depending on the broker – up to 50:1 leverage is common. This means that a 2% margin deposit ($200) allows you to control $10,000 of currency in a 1 Mini lot position in the FOREX market. FOREX trading is conducted on “margin” which…