FOREX Explained

There are many benefits and advantages to trading the Forex market. Here below please note a few reasons justifying why so many investors prefer to trade in the FOREX market.

The FOREX Market never stops. It is a 24 hour, 7 days a week market. Actually, a currency trader may exploit all profitable opportunities of this market, virtually, at any time. There is no waiting for the opening of an exchange as in the case of trading stocks, derivatives or other financial instrument. It is a 24-hour; continuous, currencies trading, that never stops. For those who want to trade on a part-time basis the Forex market is very suitable, because they can choose when they want to trade, morning, noon or night. Because of the world time zones you can actually effectively trade, 5 days per week. Even during the weekend major market makers are making transactions between each other.

With $3.0 trillion daily worth of transactions, the FOREX market is highly liquid. With a click of a mouse you can instantly buy and sell as you please. Whether it's 8 o’clock in the morning or 10 o’clock in the evening, somewhere in the world there are always buyers and sellers actively trading in Forex. You are never blocked in a transaction. You can even use the online trading platform to open a new position or to close your position at your desired profit taking level, and/or close a trade if it is going against you (stop loss).

FOREX investors are permitted to trade foreign currencies on a highly leveraged basis - up to 500 times their investment. Leverage allows traders to make substantial profits and at the same time keep low the risk of the capital they may use.

In FOREX trading you can profit in both rising and falling markets. A trader can easily "short" a particular currency pair, as easily, go "long", on another. Currencies are traded in "pairs". Thus, when you buy a particular currency, you simultaneously sell the other currency in that particular pair. As the market changes, one of the currencies will increase in value versus the other. Of course, it is up to the trader to choose the correct currency to be long or short in a pair. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. In this way, a trader has equal opportunity to achieve profits in both, a rising or falling market.

Active traders of other financial instruments like, stock and futures face substantial reduction of their gross profits going to commissions, exchange fees, and data/chart feeds. Usually, in FOREX there are no commission fees. In FOREX what you see is what you get. In the Forex market, costs are further reduced by the efficiencies created by a purely electronic marketplace that allows clients to deal directly with the dealer,  that can be a physical person or automated trading systems which significantly increase the speed of operations. Because the Forex market offers round-the-clock liquidity, traders receive tight; competitive spreads both for intra-day and night trading. Unlikely, stock and derivatives traders, who can be more vulnerable to liquidity risk and typically, receive wider trading spreads, especially during afterhours trading.

As mentioned earlier, Forex is traded in currency pairs. The currency pair consists of two currencies that make up an Exchange Rate usually known as “quote”. When, one currency is bought by a trader, the other is automatically sold, and vice versa. The Exchange Rate is the value of one currency expressed in terms of another. For example, if EUR/USD is 1.5000, 1 Euro is worth US$1.5000.

The Base Currency is the first currency in the pair. The Quote Currency is the second currency in the pair. You will always see the USD quoted first with few exceptions such as Pounds Sterling, Euro, Australia Dollar and New Zealand Dollar.

The majority of all currencies are traded against the US Dollar. The four next most traded currencies are the Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP) and Swiss Franc (CHF). These four currencies traded against the US Dollar make up the majority of the market and are called major currencies.

Currency Codes

EUR/USD = "Euro"

USD/JPY = "Dollar Yen"

GBP/USD = "Cable" or "Sterling"

USD/CHF = "Swissy"

USD/CAD = "Dollar Canada" (CAD referred to as the "Loonie")

AUD/USD = "Aussie Dollar"

NZD/USD = "Kiwi"

When you see any FOREX quote you will actually see two numbers. The first number is called the Bid and the second number is called the Ask. If we use the EUR/USD as an example you might see 1.4950/1.4952 - the first number 1.4950 is the bid price and is the price traders are prepared to sell Euros against the USD Dollar. The second number 1.4952 is the Ask price and is the price traders are prepared to buy the Euro against the US Dollar. You will also notice that there is a difference between the Bid and the Ask price and that is called the spread. For the four major currencies the spread normally varies from as low as half pip to a maximum of several pips depending on the market conditions. The pip will be explained later.

In Forex trading, we monitor the changes of the rate between two currencies, in pips, which are the smallest change in the currency price, and that could be in the second, fourth, or, even fifth, decimal place of the price, depending on the currency pair. Thus, a pip is the last decimal place of a quotation. Half-pips are a more recent development offering to traders even tighter spreads and more competitive and transparent accuracy in pricing. These price changes, expressed in the second up to the fifth decimal point, really, represent just fractions of a cent. For example, when a currency pair like the GBP/USD, moves 100 pips, from 1.6500 to 1.6600, it just moves only $0.01 of the exchange rate. This is why currency transactions must be carried out in big amounts, allowing these minute price movements to be translated into decent profits when magnified through the use of leverage. When you deal with a large amount like $100.000, small changes in the price of the currency can result in significant profits or, possibly, losses. When trading foreign exchange, the pip and its value will measure our profit or loss.

As each currency has its own value it is necessary to calculate the value of a pip for that particular currency in a particular currency pair. We also need a currency to be used as “point of reference”, so we will accept that we convert everything to US Dollars.

In currencies where the US Dollar is quoted as a Base currency (first), the calculation would be as follows:

USD/JPY: Example, JPY rate of 90.01 (notice that 1 JPY standard contract amounts to 100JPY therefore all the JPY pairs only go to two decimal places, most of the other currencies have four decimal places), 1 pip would be 0.01, so, to calculate the pip value in dollars (0.01 divided by the exchange rate = pip value) so, 0.01/90.01=0.000111

USD/CHF: Example, CHF rate of 1.0230, 1 pip would be 0.0001 (0.0001 divided by exchange rate = pip value) so 0.0001/1.0230 = 0.0000977

USD/CAD: Example CAD rate of 1.0647, 1 pip would be 0.0001 (0.0001 divided by exchange rate = pip value) so 0.0001/1.0647 = 0.0000939

In the case where the US Dollar is a quote currency (second) and we want to get back to the US Dollar value we have to add one more step – i.e. multiply it by the exchange rate of the account currency:

EUR/USD: (0.0001 divided by exchange rate (= pip value) and multiplied by exchange rate of account currency, so (0.0001/1.4950)*1.4950 = EUR 0.0001

GBP/USD: (0.0001 divided by exchange rate (= pip value) and multiplied by exchange rate of account currency so (0.0001/1.6340)*1.6340= USD 0.0001

It is obvious that the value of one pip depends on two variables; the amount of currency and the currency pair/exchange rate.

As mentioned earlier, when trading Forex, the pip and its value will measure our profit or loss. The Forex is traditionally traded in lots also called contracts. The standard size for a lot/contract is $100,000. Nowadays Forex dealers offer to investors the possibility to trade decimals of one lot (0.1, 0.2, up to 0.9). As we mentioned previously, currencies’ price changes are measured in pips, which is the smallest increment of that currency. To take advantage of these tiny changes it is necessary to trade large amounts of a currency in order to obtain any substantial profit or loss.

In Forex, in order to trade amounts larger than the ones deposited in our account, we use leverage. We shall cover leverage later but for the time being let's assume that we will be trading $100,000 lot size.

We will now present some examples to see how the amount of a trade affects the pip value per contract.

In cases where the US Dollar is quoted first:

For USD/JPY at an exchange rate of 90.01 the value per pip is (0.01/90.01) X $100.000 = $11.11 per pip (rounded)

For USD/CHF at an exchange rate of 1.0230 the value per pip is (0.0001/1.0230) X $100.000 = $9.78 per pip (rounded)

In cases where the US Dollar is not quoted first you need to convert back to dollars using an additional calculation, i.e. multiplying by the exchange rate:

For EUR/USD at an exchange rate of 1.4950 the value per pip is (0.0001/1.4950)*EUR 100.000*1.4950 = USD 10.00 per pip

For GBP/USD at an exchange rate of 1.6340 the value per pip is (0.0001/1,6340)*GBP 100.000 * 1.6340 = $10 per pip.

We should remember that as the market moves so will the pip value depending on what currency you trade.

So now that investors know how to calculate the value of one pip per currency pair/contract size let’s examine at how you work out your P&L (profit or loss).

A dealer usually provides pricing and/or liquidity for trading currency pairs and other financial instruments. A Forex dealer stands ready to buy or sell a currency pair at the quoted price either as counter part of the transaction, or, as a broker.

A dealer as a counter part of a transaction provides the required liquidity and the pricing for various currency pairs and other financial instruments. In reality, this dealer takes the opposite side of an investor’s trade. The dealer (counter party) has the option to offset a position either, partially, or, fully, with other market participants, who manage the aggregated exposure of their clients.

If a dealer chooses to keep the investor’s position without hedging it in the market, the investor’s profit is the dealer’s loss and vice versa, leading to a possible conflict of interest between the investor and his dealer. Unlikely, the dealer earns his profit from the spread between the Bid and Ask price.

In case a dealer acts as a broker, he uses external liquidity providers to provide pricing and liquidity for its clients. The liquidity providers send in competing Bids and Asks into the trading platform, resulting in the best Bid and Ask being displayed to the client. Some brokers/dealers may display the market depth which is the amount of liquidity available at each price. A greater number of liquidity providers providing pricing to the broker/dealer leads to tighter more competitive spreads. A broker/dealer may increase the spread to earn its profits.

In Forex, investors use leverage to profit from the minute fluctuations in exchange rates between the currencies of two different countries. The leverage ratio that is achievable in the Forex market, is one of the highest those investors can obtain. Leverage is a “loan” – the liquidity mentioned in the previous paragraph - that is provided to an investor by the dealer that is handling his or her Forex account. So, leverage is the ability to gear your account into a trading position greater than the amount deposited in your account. So, an investor who wants to trade $100.000, availing into his account only $1.000, he will leverage his deposit by hundred times (leverage 1:100). The amount of $100.000 is provided by the dealer. No interest is paid directly on this borrowed amount, nevertheless, the dealer requests from the investor a margin deposit. When trading Forex, you are given the freedom and the flexibility to select your real leverage amount, based on your trading style, personality and money management preferences.  

Usually, the amount of leverage ratio provided by dealers varies: 1:1 to 1:200, sometimes even higher ratios are offered, up to 1:500, depending on the dealer and the size of the position the investor is trading. Standard trading is done on 100.000 units (1 lot) of a currency, so for a trade of this size, the leverage provided is usually 1:50 or 1:100. These days, Forex dealers offer to investors the possibility to trade decimals of one lot (0.1, 0.2, and 0.3, up to 0.9).

Although the possibility to earn significant profits by using leverage is substantial, leverage can also work against our investor.

Leverage has the potential to enlarge, your profits or losses, by the same magnitude, depending on whenever the currency underlying one of his trading, moves in his/her direction or to the opposite side. The greater the amount of leverage you apply on your capital, the higher the risk that you will take. Note that this risk is not necessarily related to margin deposits (explained further down) although margin can influence a trader if he is not careful. To avoid an eventual catastrophe, Forex traders usually implement a strict money management style that includes the use of stop loss and take profit orders.

When an investor decides to invest in the Forex market, and before the investor can place any trade, he or she must first open up, and deposit money, so called margin, into a margin account with a dealer.

Margin can be thought of as a good faith deposit required by a dealer from a client/ investor in order to initiate a transaction/trade with him, or, on the client’s behalf; and maintain the client’s position “opened” until the client decides to “close” it. The margin is not a fee or a transaction cost, it is simply a portion of the investor’s equity account, set aside and allocated as a margin deposit.

The amount that needs to be deposited depends on the margin percentage that is agreed upon between the investor and the Forex dealer.

In addition, as mentioned earlier, the amount deposited is used for opening and keeping the placed trade(s) running or “open”.

For investors/clients that will be trading in 100.000 currency units (1 lot) or more, the margin percentage requested by the dealer is usually 1% or 2%, i.e. $1.000 ($100.000 x 1%).

No interest is paid directly on this amount deposited on good faith, but if the investor does not close his or her position before the end of the day during which the trade was placed, his position will have to be “rolled over”, and interest may be charged/earned, depending on the investor's position (long or short) and the short-term interest rates of the underlying currencies.

In the margin account, the dealer uses the $1,000 as security. If the investor's position worsens and his or her losses approach $1,000, the broker initiates a “margin call”. In case the additional funds are not transferred to the account in time, the dealer closes out (“stop out”) the position to limit the risk to both parties.

Investors should be aware of the “margin call” and the “stop out” procedures. Investors should always avoid them at all cost. Note that in the event that money in your account falls below predetermined threshold (Margin Call), the position/s in the account could be partially or totally liquidated, even if the position/s refer to a highly volatile, fast moving market, which could turn into the investor’s favour few seconds later.

Used margin is the amount which is being used to maintain open positions, whereas free margin is the amount available to open new position/s.

To calculate the usable free margin that will be available after placing a trade we need some simple math.

If an account has $1000 usable margin available and the trader has a 1% margin requirement and wishes to place a trade for $30.000, the amount that is deposited into the used margin field after placing the trade will be $300 ($30,000 x 1% = $300). This leaves the trader with $700 of gross usable margin ($1000 - $300 = $700).

The next step is to subtract the spread from the gross usable margin to get the net usable margin. For example, the EUR/USD is worth $1 per pip for every $10.000 contract (worth of 1 pip per standard contract of $100.000 is $10 / divided by $10.000 position = $1.00). So a $30.000 contract would equal $3 per pip. If there is a 2 pips spread then a $30.000 contract would cost $6 ($3 x 2pip spread = $6). Now take the original $700 gross usable margin and subtract the spread and there is $694 net usable margin ($700 - $6 = $694). Now let’s find out how many pips the market can move against the position to bring the net usable margin to zero, take the net usable margin and divide it by the cost per pip ($691 / $3 = 230pips).? 694/$3=231.33 (rounded). In case our investor wishes to place/open additional position(s) the above math calculations should be repeated accordingly.

The greater the amount of leverage you apply on your capital, the higher the risk that you will assume. In other words the bigger position you will open for the same deposit the higher the risk will be. But you should always remember that the higher is leverage of the account the lower will be used margin and freer margin you will have (applicable for Forex only).

For example:

Both, Trader A and Trader B have a trading capital of US$10,000, and they trade with the same broker that requires a 1% margin deposit. After doing some analysis, both of them agree that USD/JPY is reaching a top and should fall in value. Therefore, both of them sell, short, the USD/JPY at a rate of 120.00 JPY per $1.00.

Trader A chooses to apply 50 times real leverage on this trade by shorting US$500,000 worth of USD/JPY (50 x $10,000) based on his $10,000 trading capital. Because USD/JPY stands at 120.00, one pip of USD/JPY for one standard lot is worth approximately US$8.33 ($100.000/120.00/100=$8.33), so one pip of USD/JPY for five standard lots is worth approximately US$41.50 ($8.33 x 5 = $41.66). If USD/JPY rises to 121.00 Trader A will lose 100 pips (121.00 – 120.00 = -100) on this trade, which is equivalent to a loss of US$4,150. This single loss will represent a whopping 41.5% of his total trading capital.

Trader B is a more careful trader and decides to apply five times real leverage on this trade by shorting US$50,000 worth of USD/JPY (5 x $10,000) based on his $10,000 trading capital. That $50,000 worth of USD/JPY equals to just one-half of 1 standard lot. If USD/JPY rises to 121.00 Trader B will lose 100 pips on this trade, which is equivalent to a loss of $415. This single loss represents 4.15% of his total trading capital.

To calculate the leverage used, divide the total value of your open positions by the margin balance in your account. For example, if you have $10,000 of margin in your account and you open one standard lot of USD/JPY (100,000 units of the base currency) for $100,000, your actual leverage ratio is 1:10 ($100,000 /10,000 = 10). If you open one standard lot of EUR/USD for $150,000 (100,000 x EUR/USD 1.5000) your leverage ratio is 1:15 ($150,000 / $10,000 = 15).

To trade $100,000 of currency, with a margin of 1%, an investor will only have to deposit $1,000 into his or her margin account. The leverage provided on a trade like this is 1:100. Although a leverage of 1:100 may seem extremely risky, the risk is significantly less when you consider that currency prices usually change by less than 1% during intraday trading.

For instance, if a trader has $1,000 of margin in his account and he opens a $100,000 position, he leverages his account by 100 times, or 1:100. If he opens a $200,000 position with $1,000 of margin in his account, his leverage is 200 times, or 1:200. As mentioned earlier, our investor by increasing the leverage, he magnifies both eventual gains and losses.

Let's assume that you are trading, intraday, the USD/JPY pair.

You want to buy USDs and Sell JPYs (Buy USD/JPY contract or open long position on USD/JPY).

The rate you are quoted by your dealer is Bid 90.01 / Ask 90.05.

Because you are buying the USD/JPY you will be focusing on the 90.05 Ask rate, which is the rate at which traders are prepared to sell. So you buy 1 lot of $100,000 at 90.05.

A few hours later the price moves to 90.25 and you decide to close the trade.

To close your trade you ask your dealer for a new quote and you are quoted Bid 90.25 / Ask 90.30.

As you are now closing your trade, and you initially bought to open the trade, you now sell in order to close the trade and you take the Bid Price of 90.25, the price on which the traders are prepared to buy at.

The difference between 90.25 and 90.05 is .20 or 20 pips. Using the equation to calculate the value of a pip, we now have (0.01/90.25) x $100,000 = $11.08 per pip X 20 pips =$221.6

Here is an example of the EUR/USD pair, where a trader decides to sell the EUR/USD and he is quoted by his dealer: Bid 1.4950 / Ask 1.4952.

Our trader now needs a buyer. The buyer is biding 1.4950 and that is what our trader can trade.

A few hours later the EUR/USD moves lower, to 1.4873, and our trader asks for a quote. The dealer quotes, Bid 1.4873 / Ask 1.4875.

Our trader confirms the dealer’s quotation. So, he buys on the Ask Price of 1.4875. Actually, our trader sold EUR/USD s to open the trade and now to close the trade must buy back his original position.

Our trader, in order to buy back his position he takes the price traders are prepared to sell at, which is Ask 1.4875.

The difference between 1.4950 and 1.4875 is 0.0075 or 75 pips. Using the equation from above (calculation of pip’s value), we now have (0.0001/1.4875) x EUR 100,000 x 1.4875 =$10, so 75pips *$10/pip = $750.

Market Order

A Market Order is an order to buy or sell a specified number of lot(s) of a currency pair at current market price.

If the price of your request matches the most recent price on the market, your request - will be executed immediately. Unlikely, you will receive a new quote, since the price may have moved in the meantime.

Example: Suppose you want to buy 1 lot of the EURUSD pair at its currently trading price of $1, 50 per 1, 00 Euro. Actually, you want to enter the position as close as possible to the current price 1, 50. So, you place a Market Order to Buy 1 lot. Now your broker will execute your order at a price, such as $1, 5010, in case the price moved in the meantime.

The disadvantage of this type of order is that on fast moving market is hard to open and/or close a position at a specific level, because of the rapid changes of price.

Buy/Sell Limit Order

A Buy Limit Order is an order to buy a specified number of lot(s) of a currency pair at a designated price, at a price that is below the current market price.

A Sell Limit Order is an order to sell a specified number of lot(s) of a currency pair at a designated price, at a price that is above the current market price.

Once the pair’s price trades down to or below the price you have specified, your lot(s) will then be purchased at that price Example: Suppose you want to buy 1lot of the EURUSD pair, and it is currently trading at $1, 50 per 1, 00 Euro. You want though to buy this 1lot if the pair’s price drops to $1, 4985 or less, as you feel the EURUSD current price of $1, 50 per is overvalued.

You place a Buy Limit Order @ 1, 4985. Now suppose the price trades down to $1, 4985.  As long as the price will reach 1, 4985, your order would be filled at price 1, 4985 per 1,00 Euro.

The main benefit of a Buy Limit Order is that you may be able to buy the lot(s) that you want at a price that is below the current market price and you are able to set a maximum on how much you're willing to spend per lot. Buy Limit Orders are great for buying short-term market pullbacks.

But if the price drops to your limit price and you entered the trade, there is no guarantee that the price will not continue to drop further.

Sell limit order works exactly opposite to buy limit, therefore it should be placed above current market price.

Buy Stop Order

A Buy Stop Order is an order to buy a currency pair at a price above the current market price.

Example: Suppose you are looking to buy 1lot of the EURUSD pair if the price shows that it wants to go up. Assume EURUSD is currently trading at $1, 50 per 1, 00 Euro and you believe that if the price rises to $1, 5020 or higher there will be continued upward momentum. You place a Buy Stop Order @ $1, 5020. Suppose EURUSD then proceeds to trade up to $1, 5020. At that time, your order would become would be filled at the price declared by you - 1.5020.

The main benefit of a Buy Stop Order is that you will only go long on the EURUSD pair IF the price is showing upward momentum.

But, if the pair’s price reaches your stop price, the price may change direction to the downside and you may have just purchased the EURUSD at its high. Also, under abnormal market conditions, you may be filled at a price higher than your stop order price.

Sell Stop Order

A Sell Stop Order is an order to sell a currency pair at a price below the current market price. Example: Suppose you own 100 shares of Wal-Mart Stores (WMT) and you are worried that if the price falls a few more dollars that it will trigger the beginning of a much larger decline. Assume WMT is currently trading at $50 per share.

You place a Sell Stop Order @ $48 on WMT. Suppose WMT then proceeds to trade down to $48. At that time, your order would be filled at the declared by you price of 48.

The main benefit of a Sell Stop Order is that you will sell off your stock IF the price is showing downward momentum, protecting you from steeper losses. Sell Stop Orders are great for protecting gains and preventing large losses.

But, if the stock price reaches your stop price, the stock may change direction to the upside and you may have just sold the stock at its low. Also, under abnormal market conditions, you may be filled at a price lower than your stop price.

As CFDs in Forex are predominantly speculative instruments settled two days after the trading day; most of the time the traders tempt to benefit as much as possible from the difference in price of the traded currency between, opening and closing a position. Thus, they prefer to rollover their position few times – postpone the settlement date - before they decide to close their position.

So, by rolling over the position - simultaneously closing the existing position at the daily close rate and re-entering at the new opening rate the next trading day - the trader artificially extends the value date period by one day.

Also for the ease of calculation roll over swap can be expressly shown as added/deducted value without change of the opening price, calculations behind that are exactly same, but this type of swap expression is much more user friendly.

Since every Forex trade is transacted by borrowing one country's currency to buy another, receiving and paying interest is a regular occurrence. At the close of every trading day, a trader who took a long position in a high interest yielding currency relative to the currency that he or she borrowed will receive an amount of interest in his or her account. Conversely, a trader will need to pay interest if the currency he or she borrowed has a higher interest rate relative to the currency that he or she purchased. This normally happens, only, if you have rolled over the position and not if you open and close the position within the same business day, ending 22:00 GMT. So, any positions still open at this time are automatically rolled over to the next business day, which again finishes at 22:00 GMT.

Remember that if you are trading on margin, you have in effect got a loan from your broker for the amount you are trading. If you had a 1 lot position you broker has advanced you the $100,000 even though you did not actually have $100,000. The broker will normally charge you the interest differential between the two currencies if you rollover your position.

To calculate the broker's interest he will normally close your position at the end of the business day and again reopen a new position almost simultaneously.

For example, you open a 1 lot ($100,000) EUR/USD position on Monday 15th at 11:00 at an exchange rate of 1, 5000. During the day the rate fluctuates and at 22:00 GMT the rate is 1, 5030. The broker closes your position and reopens a new position with a different value date. The new position was opened at 1, 5031 a 1 pip difference. The 1 pip deference reflects the difference in interest rates between the US Dollar and the Euro. In our example you are long Euro and short US Dollar and suppose that the US Dollar, in this example, has a higher interest rate than the Euro, thus, you pay the premium of 1 pip. Now the good news, if you had the reverse position and you were short Euros and long US Dollars you would gain the interest differential of 1 pip.

So, if the first named currency has an overnight interest rate lower than the second currency then you will pay that interest differential if you bought that currency. If the first named currency has a higher interest rate than the second currency then you will gain the interest differential. To simplify the above, if you are long (bought) a particular currency and that currency has a higher overnight interest rate you will gain. If you are short (sold) the currency with a higher overnight interest rate then you will lose the difference.

The difference between the order declared price and the executed price, measured in pips. Slippage often occurs in fast moving and volatile markets, or where there is manual execution of trades.

Good Till Cancelled. An order stays in the market until it is either filled or cancelled.

A style of trading that attempts to profit from buying and selling currencies between a lower level of support and an upper level of resistance. The upper level of resistance and the lower level of support defines the range. The range forms a price channel where the price can be seen to oscillate between the two levels of support and resistance.

A style of trading whereby a trader attempts to profit from fundamental news announcements on a country's economy that may affect the value of a currency, usually seeking short term profit immediately after the announcement is released.

A style of trading that involves seeking to profit from short to medium term swings in trend. Trades can last from hours to days.

A style of trading whereby the trader attempts to profit from holding a currency with a higher rate of interest and selling a currency with a lower rate of interest, profiting from the daily interest rate differential of the position.

A style of trading that involves taking a longer term position that reflects a longer term outlook. Trades can last from weeks to months.

A style of trading that uses human judgment and decision making in every trade.

A style of trading that involves analyzing the macroeconomic factors of an economy underpinning the value of a currency and placing trades that support the trader's long or short-term outlook.

A position in which, the trader attempts to profit from an increase in price. i.e. Buy low, sell high.

A position in which, the trader attempts to profit from a decrease in price. i.e. Sell high, buy low.