What is Forex?
Foreign exchange, or forex, is the world’s largest financial market; it is a market with a huge average daily trading volume of $5 trillion. Maduro Invest offers 24-hour CFD trading on FX pairs, opening at 08:00 Sydney time on Monday mornings, and running through to 16:00 New York time on Friday afternoon. In basic terms, forex refers to the purchase of one currency against another. Maduro Invest offers CFD trading on over 70* different currency pairs.
What Moves the Forex Market?
- Central banks – The world’s money supply is determined by central banks. If a central bank increases the money supply, the currency will likely drop. Generally, central banks also control interest rate levels, which is critical to the strength or weakness of a currency.
- Economic data – Reports on the state of the economy serve as an important indicator of the currency’s strength. Major economic data includes unemployment rates, inflation rates and trade balances.
- Interest rates – Volatile currency moves tend to occur when a country’s central bank makes an unexpected move in interest rates.
Key Forex Definitions
- Pip – Generally the lowest increment in which a currency pair is priced.
- Spread – The difference between the Buy/Sell (Bid/Ask) price for a currency pair.
- Leverage – Allows you to trade higher amounts with less capital. A leverage of 1:50 means you would need $200 to place a $10,000 trade.
- Exchange Rate – The value of a base currency against a quoted currency.
- Bid – The price at which the market maker/broker is willing to buy the currency pair.
- Ask – The price at which the market maker/broker is willing to sell the currency pair.
How to Choose the Best Currency Pair to Trade?
When choosing a currency pair to trade, you should test your strategy either with a popular FX pair or with your local currency against the USD, on our free, unlimited Demo Account. Be cautious and diligent in your trades, and open small trades initially to carefully observe how the market is performing over time.