Forex(FX) or Foreign exchange market is a global marketplace for exchanging national currencies against one another. Because of the worldwide reach of trade, commerce, and finance, Forex market is the world’s most traded market, with turnover of $5.1 trillion per day.
Forex is always traded in currency pairs – for example, EUR/USD (EUR vs USD). You speculate on whether the price of one currency will appreciate or depreciate against another currency.
- Major pairs: seven currencies that makeup 80% of global Forex trading. Includes EUR/USD, USD/JPY, GBP/USD and USD/CHF
- Minor pairs: less frequently traded, these often feature major currencies against each other instead of the US dollar. Includes: EUR/GBP, EUR/CHF, GBP/JPY
- Exotics pairs: a major currency against one from a small or emerging economy. Includes: USD/PLN, GBP/MXN, EUR/CZK
With Finveo you will be able to trade with CFDs (Contract For Difference). When trading Forex, you speculate on whether the price of one currency will rise or fall against another.
Once you have learned some basic essential principles, the best way to start is with a demo trading account.With a demo account, you can experience live market movement with live data and virtual money. In this way, you get real trading experience without risking any of yours capital. This is a good way for an experienced trader to test new tactics and analytics. However, down side of demo account is that with virutal money, you are not experiencing emotional thrill like when you do with real / Live account.
If you feel confident with knowledge in Forex, go for a Live account. Our minimal investment is $100. With leverage 1:100 you’ll be able to manipulate with 10 000 USD.
When we speak about Forex, there isn’t a CEO sitting somewhere in a chair. Forex is made by several institutions and it is proud to be called largest and most liquid asset market on Earth. However, it has main participants and they are larger international banks (major banks), electronic brokerage services, financial centers around the world (medium and smaller banks), retail market makers, Hedge funds and retail traders. Forex is decentralized market which means that whole business is being conducted online, no physical location where investors go to buy and sell currencies.
Forex market is open 24 hours a day, five days a week from Sunday evening until Friday night. This is due to the various international time zones which allow you to trade 24/5.
Forex market is made up of banks, different commercial companies, central banks, hedge funds, investment management firms, retail Forex brokers and investors around the world.
International currency market is not actually dominated by a single market exchange, but instead, entails a global network of exchanges and brokers throughout the world. Forex trading hours are based on when trading is open in every participating country.
- London
- New York
- Sydney
- Tokyo
Among all other markets, Forex generates the largest turnover. This market with an approximate daily volume of $5.1 trillion, it has unique characteristics that give an edge over traditional equities and futures markets.
Market operates 24 hours a day. So there are buyers and sellers all the time, somewhere around the world, who are actively trading Forex. Traders can respond to breaking news on an immediate basis.This is quite different from other markets, such as futures, where trading times depend on the underlying commodity, market or asset and those markets have limited availability for a small part of the day.
Forex trading has no such restriction due to the fact that FX market gives superior liquidity amongst all other markets. The sheer size of the market and staggering number of market players leads to huge trading volumes.
One key difference between Forex trading and other market investments is that Forex trading is cost-efficient. Most Forex accounts trade without commission, expensive fees or data licenses. While in other markets, you must pay commissions to brokers alongside the spread amount, Forex brokers often offer trading tools and market information as part of their free services.
Forex market also offers highest leverage levels. Leverage can enable clients to trade much higher amounts than their actual deposits.
CFD (Contract For Difference) is a financial instrument that gives you the opportunity to trade on with a certain type of product (usually stocks, currencies, indices, cryptocurrencies, commodities), in a way that you do not take physical ownership of the underlying asset.
CFD trading gives you the opportunity to make a profit regardless of the movement of the product price. Some of the benefits of CFD trading are that you can trade on margin, which means that you can magnify the returnes on your investment but it is important to remember that losses will be magnified as well. With CFD you may place Buy and Sell position whether you project that market is going to rise or fall.
CFDs are leveraged products, this is called ,,margin trading” and it means that your initial deposit will be multiplied by maximum 1:100 with Finveo.
Example: With 1000 USD of investment, You will be able to open position in total value of 100 000 USD.
When trading CFDs, you must pay the spread, which is the difference between the buy and sell price. You enter a buy trade using the buy price quoted and exit using the sell price. The narrower the spread, the less the price needs to move in your favor before you start to make a profit. We offer consistently competitive spreads.
Currencies are always quoted in pairs, such as the EUR versus the U.S. dollar (EUR/USD). The first currency is called the base currency, and the second currency is called the counter currency or quote currency (base/quote).
For example, if you take €1.00 (EUR) to buy $1.1889 (U.S. dollar), the expression EUR/USD would equal 1/1.1889. The EUR would be the base currency and the USD would be the quote or counter currency. This means that 1 euro can be exchanged for 1.1889 USD.
A pip is an abbreviation for “point in percentage” and represents the smallest unit of change in the value of a currency pair. For most currency pairs a PIP represents the fourth decimal place in the exchange rate of the two currencies, ie. 1pip = 0.0001 or 0.00001. except for currency pair USD/JPY.
Example:
- EUR/USD 1.1960 to 1.1962 which is a 2 pips spread.
- USD/JPY 108.92 to 108.95 which is a 3 pips spread.
Lot represents the size of your trades in Forex. In another interpretation, Lot is the number of currency units you will trade in Forex. There are 3 main types of Lots: Standard Lot (1), Mini Lot (0.1), Micro Lot (0.01).
- Standard Lot: 1 standard lot is equivalent to the volume of 100,000 units.
- Mini lot: 1 mini lot is equivalent to the volume of 10,000 units.
- Micro lot: 1 micro lot is equivalent to the volume of 1,000 units.
Margin is the amount of funds that is required from trader to maintain his position open on the market. Since a trader is using leverage he is allowed to trade with bigger amount that he initially deposited. So, the margin is representing share of your capital that is set aside and frozen as a deposit to open a certain position.
For example, if you are trading with a x100 leverage and you open 0.5 lot position, instead of 50 000 USD your reserved margin is 500 USD.
One of the basic characteristics that makes CFD attractive product is leverage. Leverage allows you to open larger positions with small amount of your money.It is increasement of your buying power.
Example: You have 1000 USD on your account, if you use our leverage of 1:100 you would be able to open a position of 100,000 USD (or 1lot) and act is if you invested 100,000 USD! The physical money on your account would still be 1000 USD but your investment is increased 100 times.
Notification: We have Negative balance protection which means that you can only lose money you have on your account, nothing more than that. We are also equipped with Margin call and Stop out level.
A swap in Forex refers to the interest that you are charged for a trade that is kept open overnight.
Swap is charged on daily basis on all positions left opened after a trading session ends. There are two types of swaps: Swap long (used for keeping long positions open overnight) and Swap short (used for keeping short positions open overnight).
They are expressed in pips per lot, and vary depending on the financial instrument you’re trading.
If you feel confident with knowledge in Forex, go for a Live account. Our minimal investment is $100. However take a look at account types that we offer and depending on your experience, investment doesn’t have upper limit.
Swap is charged on daily basis on all positions left opened after a trading session ends. There are two types of swaps: Swap long (used for keeping long positions open overnight) and Swap short (used for keeping short positions open overnight).
They are expressed in pips per lot, and vary depending on the financial instrument you’re trading.
In Forex as in all trading markets, to go long means to buy asset with expectation that your position will rise in value. To go short means once when you sell position on trading market expectation is that same position value fall. Traders are guided by old saying: “Buy low, sell high“.
We have negative balance protection which means that you can only lose money you have on your account, nothing more than that. We are also equipped with Margin call and Stop out level.
Efficient use of your capital. One of the basic characteristics that makes CFD, attractive product is leverage. The leverage allows you to achieve a much larger position with a smaller amount of money. It increases your buying power.
Trade a huge variety of markets. You can use CFDs to trade over 17,000 instruments, including shares, indices, commodities, Forex, cryptocurrencies and more. You don’t have to access multiple platforms to trade different instruments. You can find all of them under our roof easily accessible via your web browser, phone or tablet.
No stamp duty. Unlike traditional share dealing, there is no duty stamp to pay on a CFD trade as you don’t take physical ownership of the underlying asset.
Trade in both directions. With CFD trading, you can trade and benefit with the product regardless of whether the market strengths and weaknesses in value.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your funds.
Leverage allows you to open larger positions with small amount of your money. It increases your buying power. Risk management policy should be in place.
Market volatility and rapid changes can cause balance of your account to change quickly. If you do not have sufficient funds in your account to follow price movements, there is a risk that all opened positions will be automatically closed by Margin call.
Holding costs/Swaps are applied to your account on a daily basis. In some cases, particularly if you hold positions for a long time, sum of these holding costs may exceed the amount of any profits.
GLOSSARY
Account Limit – The maximum amount of money that an account is allowed to have in it.
After Hours Trading – Trading on a market after the underlying market has closed.
AML : Anti Money Laundering
Arbitrage – Trading on a price differential between two or more markets.
Ask Price – The price at which you can buy at or bet that a market will go up.
Back Office – Administration software to monitor your account, trades, positions etc.
Base Currency – The first currency in a currency pair. For example in GBP/USD, GBP is the base currency. It is this currency that the exchange rate refers to, so if the exchange rate was 1.6350 then 1 unit of the base currency equals 1.6350 units of the second currency.
Base Rate – Refers to the official rate of interest set by the Bank of England.
Bear Market – A market in which the prices are in general decline.
Bid Ask Spread – The difference between the bid price and the offer price.
Bid Price – The price at which you can sell at or bet that a market will go down.
Bull Market – A market in which the prices are in generally rising.
Buy – When you BUY when you believe a market will rise or when you want to close a position that you have previously SOLD..
Central Bank – The Government of a country’s banker who implements monetary policy.
CFD – Contract for Difference. Margin trading on financial markets.
Closing Only – When positions may only be closed and not opened.
Closing Price – The last price that a market trades at. The ‘Official Close’ maybe a different to this.
Corporate action – When a company structure changes or a dividend is issued etc.
Cost of Carry – The actual cost to run a position from one day to the next. E.g. financing.
Counter currenc – The second currency in a currency pair, also known as the contra currency.
Cover – To reduce or close an open position.
Cross Rate – Normally refers to non major currency pairs. E.g. Aud/Cad.
Day trading – Trading throughout the day without leaving positions on to run overnight.
Deposit – The amount that you have credited into your account.
Derivative – A market that is priced using another market as its bench mark.
Dividend – A share of a company’s profits that is distributed to its shareholders.
ECB – European Central Bank
Economic Indicator – A statistic usually issued by a Government department indicating the financial state of the economy.
Equity – Another word for a share.
ETF – Exchange Traded Fund. Quoted on stock markets and mimics an underlying index, commodity or bonds etc.
Ex Dividend – When a share is traded with no rights or obligations to the due dividend.
Expiry – When a market will close and end permanently
Fair Value – difference between the underlying price and the theoretical Futures price.
Fast Market – When a market is so volatile and heavily traded that it can trade outside of the current ‘screen’ price.
Fed – Federal Reserve. The central bank of the USA.
Fill – An order that has been completed.
Flat – When you have no position.
FOMC – Federal Open Market Committee. Part of the Fed reserve that controls US interest rates.
Front Month – The main Futures contract of a market in which most trading takes place.
Futures – A contract to buy or sell something at a specified rate on a given date.
FX – Foreign exchange.
Gap – When a market price ‘jumps’ significantly from the previously traded price.
Gearing – A means of placing a large trade with only a small deposit through leverage.
Grey Market – A market that we may quote even when the actual underlying market is closed.
Hedging – A trade that reduces your exposure or risk to another trade.
High – The highest point at which a market traded.
Historical Trading Range – The price history of a market.
Illiquid – Very little volume can be traded without moving the price by a lot.
Index – A basket of weighted markets.
Indication Price – A guide price. Not an actual tradable price.
Inflation – The rate at which general price levels are rising.
Initial Margin – The amount of up from deposit required to place a particular trade.
Interbank Rates – The interest rates that large banks quote to each other.
IPO – Initial Public Offering. When a company first sells stock to the public.
KYC – Know Your Customers. An obligation on companies to know the identity, experience and requirements of their customers.
Last Trading Day – The last day in which trading is permitted before a market expires.
Leverage – A means of placing a large trade with only a small deposit through gearing.
Libor – London Interbank Offered Rate. The interest rate that commercial banks lend to each other in the UK. There is a fixing everyday at 11am which is used for a lot of global calculations.
Limit Down – The maximum that a market is allowed to fall at any one time by its regulators.
Limit Order – An order to buy or sell at a more advantageous level than where the market last traded.
Limit Up – The maximum that a market is allowed to rise at any one time by its regulators.
Liquid – When a market has a lot of buying and selling volume going through, not affecting the price.
Long Position – When you have a position in which you benefit from a rising price.
Lot – A preset trading amount. On MT4 platform this is 100,000.
Low – The lowest point at which a market traded.
Manifest Error – When a wrong price has been dealt on.
Margin Call – When you are called for additional margin as you do not have enough to allow for the adverse price movement in the position you hold.
Margin – The amount of deposit required to fund a position.
Market Order – An instruction to buy or sell at wherever the price is at the moment.
Maximum trade size – The maximum stake that can be traded at any one time.
MIS – Market Information Sheets.
Net position – Total position held.
Normal market size – The usual volume that is traded in particular market.
Notional – The nominal or face value of something.
OCO – One Cancels Other. Two orders placed, where if one is completed it cancels the other.
Offer – The price at which you can buy at.
Open position – Any current trades which have been opened and not yet closed.
Order – An instruction to initiate a trade when a specific price is reached.
OTC – Over The Counter. A market not traded on a recognised exchange.
Over Sold – When a market has been aggressively sold causing the price to move to unsustainably low levels.
Overbought – When a market has been aggressively bought causing the price to move to unsustainably high levels.
Pip – A term usually used in FX to refer to the smallest increment that a price can move by.
Point – A term used in any market referring to the smallest increment that a price can move by.
Position – Any current trades which have been opened and not yet closed.
Price – The price of the underlying market which another market may be based on.
Quote – A two-way market price containing the bid price and the offer price.
Realised P&L – The actual profit or loss made after a position has been closed.
Resistance – A level where technical analysts believe selling will occur.
Retail Investor – Someone who invests or trades in a non-professional capacity.
Rights issue – Where a company sells new shares to raise capital.
Risk – The exposure to something where the outcome is unknown to varying degrees.
Rollover – A procedure when a position which is approaching expiry is moved to the next contract expiry date.
Sell – When you SELL when you believe a market will fall or when you want to close a position that you have previously BOUGHT.
Settlement – When a market will close and end permanently.
Short position – When you have a position in which you benefit from a falling price.
Slippage – The difference between the level which an order was left at and the actual price it was filled at. This amount may increase during times of extreme volatility.
Spot – The underlying main cash price, usually referring to FX.
Spread – The difference between the Bid price and the Offer price.
Stop Loss – An order linked to an open position that will close it at a predetermined level which is further away than at present, thus limiting your loss.
Stop – An order to sell or buy at a worse level than at present. This will normally open a new position, but could be used to close a position (but it is not linked to anything).
Support – A level where technical analysts believe buying will occur.
Takeover – The transfer of ownership from one group to another.
Technical Analysis – Analysing charts and information to look for patterns or trends to help make predictions on future price movements.
Terms of Business – Your legal contract with Finveo and ours with you.
Trading range – The high and low prices that have actually traded during a given time.
Trailing stop – A stop loss order which automatically moves if you are in profit so that you keep reducing your potential loss.
Underlying asset – The core market from which other prices may be linked or related to.
Up Bet – When you BUY when you believe a market will rise or when you want to close a position that you have previously SOLD.
Volatility – The amount something moves in proportion to time.
Warrant – An option to buy a stock at a given price at some time in the future.
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