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What is Forex Trading

Forex trading is also often referred to as FX trading or currency exchange trading. It is the Foreign Exchange market operates by trading one currency for another; traders attempt to calculate the changing values of currencies over time and try and capitalize on such changes.

With an average daily turnover of up to 5 trillion US dollars, Forex is one of the world’s largest financial markets. This is because for foreign trade to take place, currencies need to be exchanged, for example due to business, tourism and commerce. The rate at which one currency can be exchanged for another is the currency exchange rate. This is always quoted in pairs, for example, EUR/USD (Euro vs US dollar).

Exchange rates can be influenced by many factors, including a country’s economic strength, inflation rate, interest rates, trade flows, tourism and political stability. These changing factors will often affect a trader’s decision whether to buy or sell a currency pair. Traders can research these areas to speculate on the changing values of currencies, buying or selling one currency against another in hope that the currency they buy will strengthen, or the currency they sell will weaken in relation to its counterpart.


Leveraged Trading

The leverage that the Forex market offers makes it an attractive mode of trading to many investors. It means that a trader only has to deposit a small fraction of an asset’s market price to initiate a trade on that asset. This enables investors to trade large amounts of money on the market relative to the capital available in their accounts.

Importantly, although trading on leverage magnifies potential payouts, it equally increases the risk of a trader’s loss. For this reason, leverage should be used with caution – if misused, leverage can quickly lead to an account wipe-out from a single unsuccessful trade. This means that it really is vital for traders to take the time to learn how to trade forex, to gain an understanding of the currency market and how to use leverage before entering a trade.

Education, strategy and patience are all highly recommended when it comes to profitably trading Forex. Begin by trading with a demo account today to see if this format of trading is suitable for you.

With ETX Capital, you can trade currency pairs with leverage of up to 200:1 (or 400:1 on certain currency pairs in certain market conditions on our MT4 platform). Browse our forex spreads on currency markets (link) to explore some of the forex options that we offer.

Traders should bear in mind that leverage settings can change based on market conditions and that increasing leverage increases risk.



A major benefit of the forex market is that it is open for trading 24 hours a day during the financial week, with a high amount of liquidity. As a global market, the main forex trading centres are Sydney, Singapore, Hong Kong, Tokyo, Paris, Frankfurt, London and New York.

The 24 hour nature of forex trading enables you to trade currency online at any time of day. This eliminates overnight risk and means that traders can react to breaking news that may influence the currency market as and when it occurs.

The constant activity and high sensitivity of global currency markets makes Forex trading an exciting, fast-paced avenue for traders. Register for an account with ETX Capital today to access educational material, seminars and apps that can help you to kickstart your forex trading career.

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