What is Forex (FX)?
Foreign Exchange, also known as FX or Forex, is a market where you trade currencies where you buy one currency with each transaction and sell another.
What are Forex Trading?
Forex is one of the most active markets around the world. Reported average daily turnover is in excess of $ 5 trillion. Forex is therefore one of the largest and most liquid financial markets in the world. Currencies are exchanged both by individual local companies for the needs of their own operations as well as by global international concerns. Of course, Forex is also an investment and speculative market in which investors are active. Forex does not have one central location or stock exchange. It is open 24 hours a day from Sunday evening to Friday evening.
Transactions or as it is commonly called forex trading allows you to take advantage of fluctuations in many exchange rates. Here you always operate on currency pairs - for example USD / PLN. You speculate on whether the price of one country's currency will rise or fall against the currency of another country. At your discretion and judgment, you are in the right position.
CMC Markets is one of the first investment firms in the world to allow Forex trading online. Now you can also use CFDs in Forex. We offer all major currency pairs including majors, minors and exotics.
THE BASE AND QUOTE CURRENCY
In the example of the EUR / USD currency pair, the first currency in the pair, i.e. EUR, is the so-called base currency, and the second, i.e. USD in this example, is the quote currency.
How does Forex work?
When investing in Forex or colloquially trading Forex, you always speculate whether the base currency will be stronger or weaker than the quote currency. So if you think the EUR will be stronger than the USD, you are buying or going long. Alternatively, when you think the EUR will be weaker than the USD, you are selling or taking a so-called short position.
When your assumptions turn out to be correct, i.e. when you bought EUR / USD and the price of this pair actually increased, you earn. If the rate has turned against your position, i.e. it has fallen, you will lose.
In Forex, you can use the leverage, i.e. open positions in such a way, your possible profit was multiplied. Remember that in leveraged transactions also your possible losses will be correspondingly higher.
What is Leverage or Leverage?
Leverage or leverage allows you to open positions greater than your capital. All you need to do to complete a transaction is that you contribute only a fraction of its full value. This fraction is called margin. At CMC Markets Polska, margins start at 3.3%. This means you can trade approximately 30 times your account equity. Then it is said that you are using a leverage of 30: 1. However, you should remember that just as leverage can multiply your profits, so can your losses. As a result, you may lose your invested funds.
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