CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.58% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Learn / Learn to Trade / What is Forex trading?

What is Forex trading?

Foreign exchange – or Forex and FX for short – is an international marketplace where currencies are exchanged against each other. As consumers, most people use forex for tourism purposes to have local currency to spend when travelling. However, the majority of foreign exchange is by retail investors or institutional investors who are trading forex to make a profit. Forex Trading sees $5.1 trillion exchanged on the market each day.Currencies are traded in exchange rate pairs, with rates impacted by everything from world events, political shifts and natural disasters. This makes Forex Trading a dynamic but often volatile market, trading some of the world’s most liquid assets. The forex marketplace is particularly appealing to retail and institutional investors thanks to its volatility and liquidity, ease of access and enormous daily trading volume. It’s a dynamic space that’s filled with opportunities with the right strategic approach and forex broker. Here are just a few of the topline benefits to call out:

Round the clock trading: If there’s a market open globally, you can trade forex. Given the cyclical nature of the markets and time zone differences, there is always a market open from Monday to Friday.

High liquidity: Forex is a highly liquid asset. It can be turned into cash quickly if required. Forex trading can see huge sums moved in and out of various currencies, with small spreads too.

Low transaction fees: forex brokers usually include transaction costs within the spread. This means your transaction costs are low and transparent, with no hidden surprises.

Make use of leverage: forex brokerages allow investors to use leverage in both buy-side and sell-side transactions. This enables them to open up a position they wouldn’t usually have access to by paying a small percentage of the deposit sum – the margin – upfront.

How to Trade Forex

Forex currency trading is reliant on understanding the economic markets and how they interact with each other. It’s essential to stay up to date with world events and global economic factors that impact the markets to achieve meaningful long-term success.

On paper, it’s not difficult to trade. The entire process can be managed online via your broker’s trading platform. However, trading successfully to turn a profit requires a bit more thought. Rookie day traders who jump in feet first, without learning the fundamentals of how to trade effectively, may find themselves losing money fast. Obtain a demo platform to let you get used to trading strategically before you spend your own money.

Currency trading can often be a gateway to building a portfolio and investing in different, more long-term trading instruments. Many traders start out with forex, thanks to how accessible it is in line with their investment goals and the quick, liquid nature of the market. Benefits include the ability to trade 24 hours a day, following the sun in different markets.

Before you begin trading currencies, select your online platform carefully. Choosing a broker whose platform provides you with the real-time tools, data, and insights you need to make successful and lucrative trading decisions is essential.

At ATC, we offer our traders access to the following tools:

  • Charting software that you can use to project, analyse and make decisions
  • An overview of key dates in an up-to-date economic calendar
  • A financial news wire that pushes information down the line, as it happens
  • Trade journals, to stay abreast of market news

What is a currency pair?

When you trade currencies, you trade them against each other. You have the base currency, which you are buying and the quote currency, which you sell. You take your position by speculating on the shift between both currencies.

Currency pairs explained

A small number of pairs – less than 20 combinations in total – make up most of the global trading volume. These tend to be across three main sessions in Europe, the USA and Asia. Volume sees considerable spikes in all three regions through the trading day.

Some of the most traded currency pairs include:

  • Euro against the US Dollar (EUR/USD)
  • British Pound against the US Dollar (GPB/USD)
  • Australian Dollar against the US Dollar (AUD/USD)
  • US Dollar against the Japanese Yen (USD/JPY)

What are the Most Volatile Currency Pairs?

The liquid nature of forex and the instability of global economies mean that the markets are exposed to extreme financial volatility. This can make trading in specific forex pairs both highly lucrative but incredibly high risk. Many traders choose the most volatile currency pairs and tailor their strategies to maximise their profits. Robust exit strategies and managed risks tolerances are essential here. And as such, it should remain the domain of highly experienced traders and financial professionals.

The 2020 global health pandemic is a perfect example of triggers that significantly affect forex trading. While traditional stocks and investment banking dipped during the pandemic, forex saw trading volume spike. New entrants entered the market. Traders sought to take advantage of currency pair volatility to turn a profit. As markets worldwide were impacted, many forex traders took advantage of disaster economics. Using rich macro-economic data to bet on the most volatile currency pairs to build their coffers.

Three of the most volatile currency pairs include:

  • New Zealand Dollar against the Japanese Yen (NZD/JPY)
  • Australian Dollar against the British Pound (AUD/GBP)
  • Australian Dollar against the US Dollar (AUD/USD)

Forex Trading with ATC Brokers

As you can see, currency trading can be a lucrative way to build profits with the right strategy and approach. Using ATC tools, data and insights, you can start trading today with a demo account or sign up for to a live trading account.

There is a high level of risk in Margined Transaction products, as Contract for Difference (CFDs) are complex instruments and come with a high risk of losing money rapidly due to the leverage. Trading CFDs may not be suitable for all traders as it could result in the loss of the total deposit or incur a negative balance; only use risk capital.

ATC Brokers Limited (United Kingdom) is authorised and regulated by the Financial Conduct Authority (FRN 591361).

ATC Brokers Limited (Cayman Islands) is authorised and regulated by the Cayman Islands Monetary Authority (FRN 1448274).

Prior to trading any CFD products, review all the terms and conditions and you should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience and knowledge before you decide to trade. Under no circumstances shall ATC Brokers Limited have any liability to any person or entity for any loss or damage in whole or part cause by, resulting from, or relating to any transactions related to CFDs.

Information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

United States applicants will need to qualify as an Eligible Contract Participant as defined in the Commodity Exchange Act §1a(18), by the Commodity Futures Trading Commission for the application to be considered.

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