FAQ

The foreign exchange market is the "place" where currencies are traded. The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world with over $5 trillion volume per day. One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly.

The foreign exchange market (forex or FX for short) is one of the most exciting, fast-paced markets around. Until recently, forex trading in the currency market had been the domain of large financial institutions, corporations, central banks, hedge funds, and extremely wealthy individuals. The emergence of the internet has changed all of this, and now average investors can buy and sell currencies easily with the click of a mouse through online brokerage accounts.

Daily currency fluctuations are usually very small. Most currency pairs move less than one cent per day, representing a less than 1% change in the value of the currency. This makes foreign exchange one of the least volatile financial markets around. Therefore, many currency speculators rely on the availability of enormous leverage to increase the value of potential movements. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity, foreign exchange brokers have been able to make high leverage an industry standard to make the movements meaningful for currency traders.

A fundamental forex trader will analyse the country’s inflation, trade balance, gross domestic product, growth in jobs, and even their central bank's benchmark interest rate.

Technical analysis involves pattern recognition on a price chart. Technical traders look for price patterns such as triangles, flags, and double bottoms. Based on the pattern, a trader will determine the entry and exit points. Unlike fundamental traders, a technical trader is not as concerned about why something is moving because the trends and patterns on the charts are their signals.

Line Charts: A simple line chart draws a line from one closing price to the next closing price. When strung together with a line, we can see the general price movement of a currency pair over some time.

Bar Charts: A bar chart is a little more complex. It shows the opening and closing prices, as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price for that period, while the top of the bar indicates the highest price paid. The vertical bar itself indicates the currency pair’s trading range as a whole. The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.

Candlestick Charts: Candlestick charts show the same price information as a bar chart, but in a prettier, graphic format. Candlestick bars still indicate the high-to-low range with a vertical line. However, in candlestick charting, the larger block (or body) in the middle indicates the range between the opening and closing prices. Traditionally, if the block in the middle is filled or coloured in, then the currency pair closed lower than it opened. In the following example, the ‘filled colour’ is black. For our ‘filled’ blocks, the top of the block is the opening price, and the bottom of the block is the closing price. If the closing price is higher than the opening price, then the block in the middle will be “white” or hollow or unfilled.

In the futures market, futures contracts are bought and sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. In the U.S., the National Futures Association regulates the futures market. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that cannot be customised. The exchange acts as a counterpart to the trader, providing clearance and settlement.

Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets to hedge against future exchange rate fluctuations, but speculators take part in these markets as well.

Note that you'll see the terms: FX, forex, foreign-exchange market, and currency market. These terms are synonymous, and all refer to the forex market.

Another way to think about leverage is to think of it as a loan. If you have $1000 and take a ‘loan’ that equates to $100 for every one of your dollars, you have $100,000 to trade with. Once your trade has been concluded, you return the ‘loan’ amount and keep the resulting profit.

It's important to note that leverage is often considered a double-edged sword since large price swings on accounts with higher leverage increase their chances of experiencing losses, especially when the account is not adequately capitalised and the individual or entity lacks a full understanding of the proper use of leverage. As a result, novice traders are encouraged to use minimal leverage whilst they increase their knowledge and experience but also as an exercise on how to make use of leverage properly which will translate into better risk management. The more seasoned professionals can use leverage as a tool to accelerate their returns and grow their initial investment.

Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets to hedge against future exchange rate fluctuations, but speculators take part in these markets as well.

Note that you'll see the terms: FX, forex, foreign-exchange market, and currency market. These terms are synonymous, and all refer to the forex market.

Forex brokers quote two different prices for currency pairs: the bid and ask price. The “bid” is the price at which you can sell the base currency. The “ask” is the price at which you can buy the base currency. The difference between these two prices is known as the spread. The spread is how “no commission” brokers make their money. Instead of charging a separate fee for making a trade, the cost is built into the buy and sell price of the currency pair you want to trade. Therefore, a broker that doesn’t charge commission has typically built in the cost of initiating and closing the trade into the spread and this is the broker’s fee.

DeFi is short for “ decentralized finance. ” It’s a catch-all term for financial applications that are built on decentralized protocols, such as Ethereum.

 

DeFi offers a number of benefits, including the ability to earn interest on digital assets, the ability to use alternative currencies, and the ability to trade digital assets without intermediaries.

Some popular DeFi applications include lending and borrowing platforms, stablecoins, tokenized BTC, and trading platforms.

If you’re interested in using DeFi applications, you can start by creating an account on a de centralized exchange, such as 0x Protocol or Kyber Network. You can also use a lending and borrowing platform, such as MakerDAO or Compound.

DeFi is still a new and emerging technology, and it’s important to be aware of the risks before getting started. Some risks associated with DeFi include platform risk, liquidity risk, and smart contract risk.

Cryptocurrencies are used to buy commodities, exchange them for other cryptocurrencies or trade them in the form of contracts for differences on platforms such as ALB. A form of digital or virtual currency that can be used to When trading cryptocurrency CFDs, you are effectively speculating on the price movements of the underlying asset.

Cryptocurrencies can be combined with other cryptocurrencies and even with fiat currencies such as United States Dollars (USD),British Pounds ( GBP ), and Euros (EUR) to form forex and crypto pairs increase.

Additionally, cryptocurrencies are known to be highly volatile and can experience significant price spikes and plunges in a single day. Therefore, you should always use risk management strategies and tools to avoid trading more than you can afford to lose.

Wall Street ( reflects the Dow Jones ):  30 Blue chip companies on the New York Stock Exchange, including Apple, Intel, Exxon Mobil and Goldman Sachs 

S&P 500 ( US SP 500 ): The most widely used index in the US stock market,  Standard & Poor's (S&P) tracks the prices of the top 500 companies listed on the New York Stock Exchange and  

NASDAQ. Includes all  companies listed on the Dow, plus 470 others. 

FTSE 100 ( UK 100 ):  FTSE tracks the prices of large companies by market capitalization listed on the London Stock Exchange. The largest companies in the index are typically found in the mining, energy (particularly oil and gas), and financial services sectors. 

DAX ( Germany 40 ): DAX tracks the stocks of the top 30 companies listed on Germany's Frankfurt Stock Exchange. The DAX index is dominated by the financial, automotive, healthcare and chemical sectors, with key components such as Allianz, BMW, Bayer and Siemens. 
 

Nikkei 225 ( Japan 225 ): Japan's leading stock market index, reflecting the stocks of 225 companies listed on the Tokyo Stock Exchange.
 

Broadly speaking, an index is a measure or measure of something. In investing, an index tracks the performance of a group of assets or a basket of stocks, such as a list of publicly traded companies and their stock prices. Investors use indices as benchmarks to measure the performance of stocks, bonds, or mutual funds relative to overall market performance.  

The S&P 500 and the Dow Jones Industrial Average are two of the most popular stock market indices. While these indices track broad market and large company stock movements, other indices may only track specific industries or market sectors.