Forex, short for the foreign exchange market, is an opportunity for individuals to trade international currencies. This is a market where massive volumes of trading take place all across the world. You can trade on the forex 24 hours a day, everyday except weekends.
It is the forex market that dictates the relative values of different currencies. The value of each currency will rise or fall depending on the demand for that particular currency. If a lot of investors are purchasing a currency on the forex then it will rise in value against other currencies and if it rises enough, be termed as ‘strong’. By buying a currency that looks to set to rise in value you can make a hefty profit. Profit is achieved when the currency you bought becomes worth more of the original currency you used to buy it with than it was at the time of your purchase.
You can therefore potentially make money through speculation on the forex. This has been the case since the 1970s, when floating exchange rates (as oppose to fixed exchange rates) were adopted by countries across the world. Those trading on the forex, however, should be aware that there are a variety of factors that affect foreign exchange rates, such as differentials in inflation and interest rates, as well changes in the political stability and economic performance of the nation of the currency.
Forex trading can be done online, making it easier than ever for you to access this global market. Forex Markets offer you a platform for conducting forex trading online, through our forex accounts. When spread betting your forex trading, you speculate on a ‘value per point’ basis. The way this works is you buy your currency at a per point rate, for example you use a currency to buy USD and you agree to do this on a $1 per point basis. Every time the currency rates change so that USD you bought is worth more, you make $1 per point. However, you also lose $1 for every point the currency rates move against you. Your overall profit would also be affected if there was a fluctuation in the value of the original currency you used to buy the USD with. Therefore, as a leveraged product, forex can lead to losses greater than your initial deposit.
It makes sense to minimise the risk you are exposed to when trading on the forex. Stop-losses are available to protect your trading.
Risk warning: Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.