Introduction to Forex

The forex market is the world’s most exciting and dynamic market. With $5 trillion traded every day, it is also the largest financial market in the world. Forex (or FX) stands for ‘foreign exchange’ which a traveler will know as the currency that you buy when visiting another country. For example, you may sell euros and buy dollars for your trip to the USA. The online forex market is, however, 90% speculative, which means that you don’t take possession of the actual, physical currency. Rather, you open and close deals and make either a profit or loss which gets reflected in your online account. The forex market is an over-the-counter (or OTC) market which means that trading takes place directly between two parties without dealing through an exchange. This means you can conveniently access the virtual market online anywhere in the world.

The forex market has several advantages over other types of trading, such as traditional stocks:

• Liquidity : The high volumes traded globally lead to high liquidity. The big advantage of liquidity is that you can always find demand to sell or buy the currency pair you wish.
• Increased leverage : Leverage is when you ‘borrow’ money so that you can use a small investment to get a greater yield. Most stock markets offer 1:2 leverage. With forex, 1:100 and higher is common. This means your opportunities for gain are greatly enhanced. Remember though that your risk increases too.
• Increased opportunities : Forex market conditions can change at any time in response to real-time events. While you must be aware of the risks such as changing markets can pose, remember that volatile markets also offer high profit opportunities.
• No commissions : LidyaTrade does not charge you a commission. Instead, as the market maker, we make our money from the spread (i.e. the difference between the buy and sell price) as well as any rolling/renewal fees if you have kept a trade open overnight.
• Easy access : At LidyaTrade you can start trading forex with a low first deposit. You can fund your account with a debit or credit card and start trading within minutes.

In forex trading , you mainly trade currencies, which are always traded in pairs. There are four major currency pairs (called the majors) which are mostly traded against the US dollar. They are the euro/dollar (EUR /USD), the British pound/dollar (GBP/USD) the Japanese yen/dollar (JPY/USD) and the Swiss franc/dollar (CHF/USD). Trading in the four major pairs makes up the majority of the market and the most commonly traded currency pair is the euro/dollar (EUR/ USD). You can also trade hundreds of other currecies against each other (called cross currencies because the exchange rate is calculated via the US dollar), but remember that the majors are the most liquid. At LidyaTrade you can trade precious metals (like gold and platinum), global equity indices and commodities (like oil, gas, wheat, corn and more).

There are two parties involved in an online forex deal: you as the trader and the market maker, for example, LidyaTrade . A market maker is a company that facilitates trading by offering an ask and bid price on a currency, literally making the market for traders to trade in. Individual forex traders like you make up the fastest-growing segment of the global forex market. The other players include the interbank market which is mostly made up of the largest commercial banks and securities dealers, after which you have the smaller banks, multi-national corporations and hedge funds.

Because forex is a truly global market, you can trade 24 hours a day, five days a week. As one region’s market day ends, the next region’s market day begins. This means you can trade on any region’s news as developments take place.

 

Online, anywhere, anytime, on the device of your choice. You have full control to monitor the status of your trades, modify the terms of your open deals, close deals or withdraw profits. The ability to access your deals 24/7 is a great benefit of online trading.

You can profit from forex trading by correctly determining whether one currency in a currency pair will go up (strengthen) or go down (weaken) relative to the other currency in the pair. With forex, you can profit whether the market is rising or falling. This is because currencies are traded in pairs. The key is to buy when a currency is low and sell it back once it is high.In Getting started we take you to step by step through a trade. Traders develop trading strategies based on technical and fundamental analysis. Technical analysis is the use of charts and other statistical measures to predict future price movements based on past prices, while fundamental analysis looks at how macro-economic data releases, news announcements and , other reports may cause rates to change.

As with any marketplace, the main factor behind changes in exchange rates is supply and demand. In the forex market , there are however many other factors that cause prices to fluctuate as well. These factors may be of an economic, political or geographical nature. The fundamental analysis explains how you can use these factors to forecast currency rate movements.

While forex trading is risky, the risk can be minimised through the use of various controls you can put in place. For example, through setting a stop loss, you ensure that you cannot lose more than the amount you decide to risk on a trade (also called your ‘margin’). In this way, your loss is capped while your potential profit is unlimited. You are strongly advised never to risk more than you can afford to lose. We also advise you to start with an investment that is comfortable for you and to continue to educate yourself as your interest in trading increases.

It’s simple. Register on the LidyaTrade website and deposit the amount you wish to invest in your account. We accept many different payment types which vary according to the region you live in. Generally, we accept deposits via most major credit or debit cards, bank wire transfers and e-wallets. Contact your account service manager by email support@lidyafx.com to find out which payment solutions are available to you. Once your deposit has been received, you are ready to start trading.