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Forex FAQ

What is Forex?

The foreign exchange market (also known as FX or Forex) is a global marketplace for exchanging national currencies against one another. Currencies trade against each other in exchange rate pairs, so the Forex traders trade by buying and selling currency pairs.

Where is the Forex market located?

The Forex market is not centralized, as are stock exchanges. It is a global, decentralized market and has no physical location. It is a distributed electronic marketplace with nodes in financial firms, central banks, and brokerage houses.

When does the Forex market open?

The Forex market is open 24 hours a day in different parts of the world, from 5 p.m. EST on Sunday until 4 p.m. EST on Friday. Since traded globally, the Forex’s ability to trade over 24 hours is due to different international time zones.

Is trading Forex legal?

Trading Forex is legal, and is regulated in many countries, like the UK, USA, and EU. However, some countries like Israel, Belgium, and China completely ban Forex. There are also many scam brokers, so one should be careful when choosing the broker.

What is Spread in Forex?

In Forex trading, the spread is the difference between the bid price and ask price, the sell and buy price, of a currency pair.

What is a Pip in Forex?

A pip is short from a “percentage in point”. A pip is the smallest price move that an exchange rate can make. Almost all currency pairs are priced out to four decimal places, and the pip change is the last (fourth) decimal point. A pip is thus equivalent to 1/100 of 1% or one basis point. The only exception to the rule is currency pairs with Japanese Yen (EUR/JPY, USD/JPY). The currency pairs are priced out to two decimal places, and the pip change is the second (last) decimal point.

What are the most traded currency pairs?

The United States Dollar (USD) is the most commonly traded currency in the world. Major currency pairs are those that include the Dollar as the base currency and is combined with the Canadian Dollar, the Euro, the British pound (GBP), the Swiss franc (CHF), the New Zealand Dollar (NZD), the Australian Dollar (AUD), or the Japanese yen (JPY).

How to become a Forex trader?

The first step to getting your Forex trading off the ground is to open an account with a leveraged broker. A trusted online broker will interact directly with the bank for you, and provide useful market insights, tools and educational resources.

How much can I make trading Forex?

The Forex market exchanges trillions of dollars every day. That means your earning potential is technically limitless. It depends on how much you’re risking per trade and how successful you are at the trades. It is not the same if you risk $1000, and if you risk $5000. Also, there are days when the prices are skyrocketing and weeks and months that nothing so important is going on.

What is the difference between regulated and unregulated Forex brokers?

Regulated brokers are registered with their country’s financial regulatory body (for example, the FCA in the UK) and who must comply with the rules set down by that body. When a broker is unregulated, there is no regulatory organization or group of persons monitoring them. Still, unlicensed brokers, or unregulated, are very common and they are not illegal. The main thing you stand to lose if you deal with them is your access to recourse. Regulated brokers are not guaranteed to treat you well, but they are guaranteed legal scrutiny if they break the rules.

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