Forex trading allows you to speculate on the strength or weakness of currencies, where traders simultaneously buy one currency in a pair and sell the other. Forex traders attempt to profit from fluctuations in exchange rates between currencies, speculating whether the value of one currency (such as the Australian dollar) will rise or fall relative to the value of another currency (such as the US dollar).

With over $5 trillion worth of currency traded every day, the Forex market is the world’s most traded market, and is a liquid and dynamic market. This high market liquidity means that prices can change rapidly based on news and short-term events, creating a variety of trading opportunities for retail Forex traders.

Why do investors love Forex trading?

Trade when the market is rising or falling
Go short when the market is falling, or go long when the market is rising
Leverage trading
Control a large number of trading positions with a small amount of capital
Volatility
Currency prices fluctuate constantly, providing frequent trading opportunities
24-hour trading
Global trading market, available 24 hours a day
Liquidity
Active liquidity means you can trade with lower transaction costs
How does Forex trading work?
Forex is always quoted in pairs of one currency against another. Take the EUR/USD (Euro to US Dollar) for example – the fluctuations in the exchange rate between these two is where traders hope to profit. The first currency, also known as the base currency, is the currency that you think will rise or fall against the second currency, the quote currency.

When trading currencies, you speculate on the future direction of the market, taking a long (buy) or short (sell) position depending on whether you think the currency will rise or fall in value. Forex price movements are triggered by a currency appreciating (strengthening) or depreciating (weakening).

EUR/USD Example

The Euro is the base currency and the US dollar is the quote currency. If the price of EUR/USD is 1.06325, it means that 1 Euro is equal to 1.06325 US dollars.

If this number increases, it means that the Euro is getting stronger compared to the US dollar.

If this number decreases, it means that the US dollar is getting stronger compared to the Euro.

Buy – Go Long
When trading, if you think that the base currency will strengthen against the quote currency, or the quote currency will weaken against the base currency, then you will choose to buy (go long) the currency pair.

So if we think that the Euro will strengthen against the US dollar, then we will enter a buy trade (go long).

For every pip that the Euro rises against the US dollar, we will make a profit. Of course, if the Euro weakens against the US dollar, we will also lose money for every pip that it falls.

Sell ​​– Go Short
If you think the base currency will depreciate against the quote currency, then you can sell (go short) the currency pair.

If we think the EUR will depreciate against the USD, we will enter a sell (go short) trade and you will make a profit for every pip the EUR/USD falls. If the EUR/USD rises, then you will lose money for every pip it rises.

Forex trading is margin trading
Margin trading is also known as leverage trading, which means that you only need to invest a small amount of money to control a larger amount, which will have the potential to magnify your profits or increase your losses, so you should manage your risk accordingly – make sure you fully understand the risks of leverage trading.

What are currency pairs?
Commonly traded currency pairs are traditionally divided into three groups based on popularity and liquidity: majors, minors and exotics. At Ec Markets, you can trade over 65 currency pairs, including majors, minors and exotics.

Majors
These are the most liquid currency pairs (most actively traded), accounting for about 85% of the total volume in the Forex market. These currency pairs are generally traded with tighter spreads than the less traded minor currency pairs.

Minors
These pairs are not traded as heavily as the majors and therefore tend to change trends more frequently. Minors also tend to have wider spreads than majors due to medium market liquidity.

Exotics
These are currency pairs that are rarely traded. Due to low trading volumes, exotic currency pairs lack liquidity and have wider spreads, which makes trading costs higher. Many traders consider exotic currency pairs to be riskier than commonly traded currency pairs.

Is Forex Trading Right for Me?
Forex trading is ideal for investors who want the opportunity to trade in a market that is open 24 hours a day, while minimizing transaction costs and potentially profiting from rising or falling markets.

Forex trading is ideal for those who:
Seeking short-term trading opportunities
Forex prices are affected by economic and geopolitical conditions, such as interest rates, inflation, and geopolitical instability, which usually have only short-term effects, so more Forex traders often choose to take profits in just a few hours, days or weeks.

Trade on Your Own
Ec Markets only provides order execution services. We do not provide trading advice or trade on your behalf.

Want to use a diversified portfolio
Ec Markets provides individual investors with a convenient way to participate in the Forex market.

Trade as You Want
You can trade according to your situation, whether it is frequent trading or trading with very small amounts of capital.