Foreign Exchange trading, also known as Forex or FX trading, has gained enormous popularity in recent years among layman individuals due to the growth of online brokers and the technological development of online trading platforms. With high liquidity, non-stop opening hours 5 days a week, and great opportunities, it is no wonder that the forex market is the world’s most traded market with a daily trading volume of $5 trillion USD.
Why Trade Forex with AvaTrade?
- Trade with confidence – AvaTrade is an internationally regulated broker.
- 50+ currency pairs – Trade major, minor and exotic pairs.
- Competitive Spreads – Starting at just 0.8 pips.
- Powerful Platforms – Manage your trade manual or use automated trading.
- Leveraged Trading – Up to 400:1 leverage on currency pairs.
- Master your trading skills – High quality educational materials & daily market analysis.
- Best in class customer service – 24/5 multi-lingual live support.
What is FX Trading?
The Basic Concept
When trading Forex, you are buying one currency by using another. Therefore, the FX trader is trading currency pairs and not each currency individually. Take for example the EURUSD, when buying the pair – it means you are buying EUR using (selling) USD. When selling the pair – it means you are buying USD using (selling) EUR.
The pairing of the currencies is presented as a rate, which reflects the ratio between the values of the two currencies. For instance, the rate for buying the pair GBPUSD is 1.50514, i.e. £1 GBP = $1.50514 USD.
Forex Pairs Groups
The Forex pairs are divided into three main groups – majors, minors and exotic pairs. The main difference between the pairs is their liquidity which is a result of the trading volume of these pair. E.g., the major currency pairs are the most traded pairs and each include the USD and another currency, while the most traded minor pairs include one of the three major non-USD currencies (The Euro, the UK Pound and the Japanese Yen).
To learn more about Forex trading we recommend to visit our education section, where you can find our Sharp Trader, glossary, trading video tutorials, webinars and more.
How to trade FX with AvaTrade
Forex Trading Platforms
AvaTrade offers a selection of trading platforms, for both automated and manual trading, with unique features and tools to optimize your trading experience. Whether you are interested to trade on your own, or copy the trades of others, our selection caters to all traders, where you are sure to find the one for you. We also offer the option to open a demo account on each platform, where you can practise trading on your platform of choice and master your trading skills, before you start trading in the real market with your own money.
The ability to hold larger trading positions than what one’s own capital allows is enabled through leverage given by the broker. At AvaTrade, traders can enjoy up to 400:1 leverage on most forex pairs. This means that a trader needs only 0.25% of a position size in order to open a position.
For example, if the EURUSD pair is traded at a buying price of 1.1123. To open a position of 100,000 units of the instrument, a trader needs €111,230 Euro, or $123,721.12 USD. However, thanks to leveraged trading, the trader will need only 0.25% of this position, i.e. €278.07 Euro, or $309.30 USD. The ability to leverage one’s position is a great advantage which can magnify a trader’s profits. However, one should always have in mind that losses can be magnified as well.
How to Calculate the Cost of a Forex Trading Position?
When a trader opens a position at AvaTrade, he is not charged any other commissions beside the spread. The spread is the difference between the buy and sell price which is counted in pips – the fourth digit after the dot. For example if the buy price of EURUSD is 1.1123 and the sell price is 1.1120, then the spread is 3 pips. The spread charged for a position opened by a trader is the spread multiplied by the size of the position.
AvaTrade’s clients can choose between trading forex with fixed spread versus trading with floating spreads, which are flexible and changing. AvaTrade offers spreads from as low as 0.8 pips.
Range of Markets
AvaTrade provides its traders with the ability to trade over +50 Forex pairs, including all the major currency pairs, minors and exotics. Trading Bitcoin and other digital currencies is also available to AvaTrade's clients.
For more information regarding leverage and spreads for all FX pairs offered by AvaTrade, please take a look at our trading Trading Conditions & Charges.
Start Trading Forex with AvaTrade
AvaTrade delivers, top-notch online forex trading experience. Open your account now to enjoy yours, or try our risk-free demo account.