What is Forex Trading and how does it work?

What is Forex Trading?

Forex Trading: Forex, which is also called foreign exchange or FX trading, is when one currency is changed into another. Learn everything you need to know about forex.

Through forex trading, one currency can be changed into another. When you trade forex, you always trade a currency pair, which means you sell one currency and buy another at the same time.

Each currency in the pair is shown as a three-letter code, which usually consists of two letters that stand for the country and one letter that stands for the currency. For instance, USD means “US dollar” and “JPY” means “Japanese yen.” In the USD/JPY pair, you sell the Japanese yen to buy the US dollar.

The euro against the US dollar (EUR/USD), the British pound against the euro (GBP/EUR), and the British pound against the US dollar (GBP/USD) are some of the most traded FX pairs.


The foreign exchange market, also called the forex market or the FX market, is a place where currencies from different countries can be traded.

Because trade, commerce, and finance happen all over the world, forex markets tend to be the biggest and most liquid markets for assets in the world.

As exchange rate pairs, currencies are traded against each other. For instance, EUR/USD is a pair of currencies that lets you trade the euro against the U.S. dollar.

There are both spot markets (cash markets) and derivatives markets, which offer forwards, futures, options, and currency swaps.

Forex is used by people in the market, among other things, to protect themselves from international currency and interest rate risk, to speculate on geopolitical events, and to diversify their portfolios.


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What Is the Foreign Exchange Market?

On the foreign exchange market, people buy and sell currencies. Currencies are important because they let us buy goods and services both in our own country and in other countries. To do business and trade across borders, you need to exchange currencies.

There is no central market for foreign exchange is one thing that makes this international market unique.

Instead, currency trading is done electronically over the counter (OTC), which means that all transactions happen through computer networks between traders from all over the world and not on a single exchange.

The market is open 24 hours a day, five and a half days a week, and currencies are traded around the world in the major financial centers of Frankfurt, Hong Kong, London, New York, Paris, Singapore, Sydney, Tokyo, and Zurich, which are in almost every time zone.

This means that when the U.S. trading day ends, the forex market starts up again in Tokyo and Hong Kong. Because of this, the forex market can be very busy at any time, with prices constantly changing.


What are Forex Pairs?

Most providers divide pairs into the following groups to keep things in order:

The are 3 kinds of  forex Currency pairs:


1. Majors

Seven currencies make up 80% of all forex trading around the world. Contains the EUR/USD, USD/JPY, GBP/USD, and USD/CHF pairs.

More about what major trading pairs are

2. Minors

Minor pairs are traded less often, and instead of the US dollar, they often match up two major currencies against each other. Contains the EUR/GBP, EUR/CHF, and GBP/JPY.
More about what minor trading pairs are

3. Exotic

Exotic pairs are made up of a major currency and a currency from a small or developing economy. Includes USD/PLN, GBP/MXN, and EUR/CZK

* Regional pairs are groups of two people from the same region, like Scandinavia or Australasia. Among them are EUR/NOK, AUD/NZD, and AUD/SGD.

More about what exotic trading pairs are

Most foreign exchange deals are made by banks or people who want to buy a currency that will go up in value compared to the currency they are selling. But you have done a forex transaction if you have ever changed one currency into another, like when you traveled.

How does Forex Trading work?

Over-the-counter (OTC) markets are where institutional forex trading takes place directly between two parties. There are no central exchanges, like there are in the stock market. Instead, a global network of banks and other organizations run the institutional forex market.

There are four major places where foreign exchange is traded, each in a different time zone: London, New York, Sydney, and Tokyo. Since there is no central place to trade forex, you can do it at any time.

Most traders who bet on currency prices do not actually buy the currency. Instead, traders make predictions about exchange rates to take advantage of changes in prices on the market. Trading derivatives, like an IG rolling spot forex contract, is the most common way to do this.

Trading derivatives lets you bet on how the price of an asset will change without actually owning that asset. For example, when you trade forex with IG, you can guess which way you think the price of a currency pair will move. How much you make or lose depends on how well your prediction turns out.


There are 3 kinds of Forex Markets:

On the forex market, there are three different ways to trade: spot, forward, and future.


1. Spot Forex Market:

The physical exchange of a currency pair happens at the exact moment the trade is settled or within a short time. Over-the-counter, dealers like IG sell derivatives that are based on the spot forex market.

What is the Spot Market?

The spot market for forex trading has always been the biggest because it deals in the biggest real asset that the forwards and futures markets are based on.

Before, more money changed hands on the forwards and futures markets than on the spot markets.

But the number of forex brokers and the rise of electronic trading have made it easier for more people to trade on forex spot markets.

On the spot market, people buy and sell currencies based on how much they are worth.

This price is based on supply and demand and is calculated using a number of factors, such as current interest rates, economic performance, how people feel about current political situations (both at home and abroad), and how people think one currency will do against another in the future.

A spot deal is a deal that has already been made. It is a two-way deal where one party gives the other party an agreed-upon amount of one currency and gets an agreed-upon amount of another currency at the agreed-upon exchange rate.

When a position is closed, the settlement is done in cash. Even though the spot market is often thought of as a place where trades happen right now instead of in the future, it actually takes two days for trades to settle on this market.

2. Forward Forex Market:

A contract is an agreement to buy or sell a set amount of a currency at a set price at a set date in the future or within a range of future dates.

What is the Forward Market?

In the OTC markets, a forward contract is a private agreement between two parties to buy a currency at a certain price and time in the future.


On the forwards market, contracts are bought and sold between two parties who decide the terms of the deal between themselves. On public commodity markets like the Chicago Mercantile Exchange, futures contracts are bought and sold based on a standard size and settlement date (CME).

Keynote: The forwards, futures, and options markets are different from the spot market in that they do not trade actual currencies.
Instead, they deal in contracts, which are claims to a certain type of currency, a certain price per unit, and a date in the future when the claim will be settled. They are called derivatives markets because of this.

3. Futures Forex Market:

An exchange-traded contract to buy or sell a set amount of a certain currency at a set price and date in the future.

What is the Futures Market?

A futures contract is a standard agreement between two parties to take delivery of a currency at a certain time and price in the future. Futures trade on exchanges, not over-the-counter.

The National Futures Association (NFA) is in charge of the futures market in the United States. Futures contracts have details that can’t be changed, such as the number of units being traded, the dates of delivery and settlement, and the minimum price increments. The exchange acts as the trader’s counterparty and helps with clearing and settlement.

Both future and forward types of contracts are legally binding and are usually settled for cash at the exchange in question when they expire, though contracts can also be bought and sold before they expire.

When trading currencies, the forwards and futures markets for currencies can help protect against risk. Most of the time, big international companies use these markets to protect themselves from future changes in exchange rates. Speculators also take part in these markets.

On some currency pairs, you can also trade options contracts in addition to forwards and futures. Before the option expires, people who own forex options have the right, but not the obligation, to make a forex trade at a future date and for a set exchange rate.

Uses of the Forex Markets
Forex for Hedging

When companies buy or sell goods and services outside of their home market, they are at risk because the value of their currency can go up or down. By setting a rate at which the transaction will be made, foreign exchange markets offer a way to protect against currency risk.

Traders can do this by buying or selling currencies ahead of time on the forward or swap markets. This locks in an exchange rate. For example, let’s say a company wants to sell watchs made in the U.S. in Europe when the exchange rate between the euro and the dollar is €1 to $1 at parity (EUR/USD).

The watch costs $100 to make, and the U.S. company plans to sell it for €150, which is the same price as other European watches. If this plan works, the company will make $50 per sale because the exchange rate between EUR and USD is even. Unfortunately, the value of the U.S. dollar starts to rise against the euro until the EUR/USD exchange rate is 0.80, which means that it now costs $0.80 to buy €1.00.

The problem for the company is that even though it still costs $100 to make the watch, it can only sell it at a competitive price of €150, which is only $120 in dollars (€150 0.80 = $120). Because the dollar was stronger than expected, the profit was much lower than expected.

This risk could have been lessened if the watch company had sold short the euro and bought the U.S. dollar when they were equal. So, if the value of the U.S. dollar went up, the money made from the trade would make up for the less money made from selling watches. If the value of the U.S. dollar went down, the watch sales would make more money because of the better exchange rate. This would make up for the trade losses.

On the currency futures market, this kind of risk can be covered. The fact that futures contracts are standardized and cleared by a central authority is good for traders. But currency futures may not be as liquid as the forwards markets, which are not centralized and are part of the global interbank system.


The supply and demand of currencies is affected by things like interest rates, trade flows, tourism, economic strength, and geopolitical risk. This makes the forex markets change every day.

There is a chance to make money from changes that raise or lower the value of one currency compared to another.

Because currencies are traded in pairs, a prediction that one currency will lose value is pretty much the same as a prediction that the other currency in the pair will gain value.

Imagine a trader who thinks that interest rates in the U.S. will rise faster than in Europe, but the exchange rate between the two countries’ currencies (EUR/USD) is 77, which means that it costs $0.77 in USD to buy €1.00 in EUR.

The trader thinks that higher U.S. interest rates will make more people want to buy USD, which will cause the EUR/USD exchange rate to go down because it will take fewer and stronger USDs to buy a EUR.

If the trader is right and interest rates go up, the EUR/USD exchange rate will go down to 0.60.

This means that $0.60 USD is needed to buy €1 EUR. If the investor had sold short the EUR and bought long the USD, they would have made money from the change.

Currency quotes and the base currency

The first currency in a forex pair is called the base currency, and the second currency is called the quote currency. How much one unit of the base currency is worth in the quote currency is the price of a forex pair.


The base currency is GBP 
or the currency you are buying in the FX trade
The base currency is GBP 
or the currency you are buying in the FX trade

If the GBP/USD exchange rate is 1.4444, then one pound is worth 1.4444.

If the value of the pound goes up against the dollar, one pound will be worth more dollars, and the price of the pair will go up.

If it goes down, the price of the pair will go down. So, you can buy a pair if you think the base currency will get stronger against the quote currency (going long).

You can sell the pair if you think it will go down (going short).

Ask and Bid price in forex trading

What is the Ask & Bid Price?


An ask, also called an offer, is the lowest price at which you are willing to buy a currency. For instance, if you put a “ask price” of $1.3891 for GBP, that means that is the least amount of USD you are willing to pay for a pound. Most of the time, the ask price is more than the bid price.


A bid is the price at which you’re willing to sell a currency. In a certain currency, it is the job of a market maker to keep putting out bids in response to buyer requests. Even though they are usually lower than ask prices, bid prices can be higher than ask prices when demand is high.


What is a pip in Forex Trading?

Pips are used to measure how much a forex pair moves. A change in the fourth decimal place of a currency pair is usually called a forex pip. So, if EUR/USD moves from $1.44441 to $1.44451, it has moved one pip. The decimal places that come after the pip are called micro pips, or sometimes pipettes, and they show a fraction of a pip.

The only time this isn’t true is when the quoted currency is listed in much smaller amounts. The Japanese yen is the best example of this. Here, one pip is equal to a change in the second decimal place. So, if EUR/JPY moves from 112.149 to 112.159, it has moved one pip.


What is the Spread in Forex Trading?

In foreign exchange trading, the spread is the difference between the prices to buy and sell a currency pair. If the price to buy EUR/USD was 1.1115 and the price to sell it was 1.1119, for example, the spread would be four pips.

If you want to open a long position, you trade at the buy price, which is slightly higher than the market price. If you want to open a short position, you trade at the sell price, which is slightly below the market price.

Some Forex Brokers offer competitive spreads of 0.8 pips for EUR/USD and USD/JPY and 1 pips for GBP/USD, AUD/USD, and EUR/GBP. More about what the spread is in forex trading


What is a lot in Forex Trading?

Currencies are traded in lots, which are groups of currency that are used to make forex trades more consistent. A standard lot in the forex market is 100,000 units of currency. You can also sometimes trade mini lots and micro lots, which are each worth 10,000 and 1,000 units.

Individual traders may not have 100,000 USD, GBP, or EUR to put on every trade, so many forex trading companies offer “leveraged” accounts.


What influences the Foreign Exchange Market Prices?

Forex, like most other financial markets, is mostly driven by forces of supply and demand, and it’s important to understand what drives these forces.

Global and Regional News

Most commercial banks and other investors want to put their money in economies that are expected to do well in the future. So, if good news about a certain region hits the markets, it will make people more likely to invest and raise the demand for that region’s currency.

Unless the supply of the currency also goes up, the difference between supply and demand will cause its price to go up. In the same way, bad news can make people less likely to invest, which can bring down the price of a currency. So, currencies tend to show how well the economy of the country or region they come from is doing.

Factors such as:

  • Inflation
  • GDP
  • Retail sales
  • Employment
  • Production reports

Market sentiment

Currency prices are also affected a lot by how people feel about the market, which is often based on news. If traders think that a currency is going to move in a certain way, they will trade in that way and may persuade others to do the same, which could increase or decrease demand.


Central banks

Central banks are in charge of the supply, and they can announce changes that will have a big effect on the price of their currency. Quantitative easing, for example, means adding more money to an economy, which can cause the price of its currency to go down.

The base interest rate for an economy is also set by the central bank.

If you buy an asset in a currency with a high-interest rate, your returns may be higher. This can bring a lot of investors to a country that just raised its interest rates, which can boost its economy and make its currency go up.

But higher interest rates can also make it harder to borrow money. If it costs more to borrow money, it is harder to invest, and currencies may lose value.


A Brief History of the foreign exchange market:

In its simplest form, the foreign exchange market has been around for hundreds of years. People have always traded goods and money in order to buy goods and services. But the foreign exchange market as we know it today is a fairly new thing.

When the Bretton Woods agreement started to fall apart in 1971, more currencies were given the freedom to trade freely with each other. Foreign exchange trading services keep an eye on how the prices of different currencies change based on demand and circulation.

Most currency trading on the forex market is done by commercial and investment banks on behalf of their clients. However, professional and individual investors can also trade one currency against another for speculation.

As an asset class, currencies have 2 things that set them apart:

  1. You can make money from the difference in interest rates between two currencies.
  2. You can make money when the exchange rate changes.

An investor can make money from the difference between two interest rates in two different economies by buying the currency with the higher interest rate and selling short the currency with the lower interest rate.

Before the Internet, it was hard for individual investors to trade currencies. Because it takes a lot of money to trade currencies, most currency traders were large multinational corporations, hedge funds, or high-net-worth individuals (HNWIs).

With the help of the Internet, a market for individual traders has grown. This market gives easy access to the foreign exchange markets, either through the banks themselves or through brokers who make a secondary market.

Most online brokers or dealers give individual traders a lot of leverage, which means they can control a big trade with a small amount of money in their account.

Before the financial crisis of 2008, it was common to short the Japanese yen (JPY) and buy British pounds (GBP) because the difference in interest rates was so big. This kind of trade is sometimes called a “carry trade.”


What is Leverage in Forex Trading?

One of the best things about spot forex is that you can open a position with leverage. With leverage, you can invest more in a financial market without having to put up as much money.

You don’t have to pay the full value of your trade up front when you use leverage. Instead, you make what is called a “margin” deposit. When you close out a leveraged position, your profit or loss is based on the full size of the trade.

This means that leverage can make your profits bigger, but it can also make your losses bigger, too. Your losses could even be bigger than your initial deposit. Because of this, it is very important to learn how to manage your risk if you do leveraged trading.

More about how leverage works


What is Margin in Forex Trading?

Margin is an important part of trading on margin. It’s the name for the money you put down at the start of a leveraged position and keep putting up to keep it open. When you use margin to trade forex, keep in mind that your margin requirement will change depending on your broker and the size of your trades.

Most of the time, margin is shown as a percentage of the whole position. So, to open a position on EUR/USD, for example, you might only need to put down 2% of the total value of the position. Even though you’re still taking a $10,000 risk, you’d only have to put down $200 to get the full exposure.  More about how margin works

How you can Starting Trading Forex

1. Learn about Forex Trading, Terminology, and Strategies

While not complex, forex trading demands specialized understanding. Forex leverage is bigger than for equities, and currency price drivers are different. Online courses teach beginners forex trading.

2. Set up a Trading Account with a Regulated Forex Broker

To start forex trading, you’ll need a brokerage account. Commission-free Forex brokers exist. Spreads (sometimes called pips) between buying and selling prices are how they generate money.

Beginners should open a low-capital micro forex trading account. Such accounts allow brokers to trade as little as 1,000 units of a currency. A standard account lot is 100,000 units. A micro FX account helps you get comfortable with forex trading and find your style.

3. Create a Trading Strategy that Suits you:

While it’s not always possible to foresee and time market movement, having a trading strategy will help you define broad principles and a road map for trading. Your situation and money should inform your trading technique. It considers how much cash you’re willing to trade and how much risk you can handle without burning out. Forex trading is high-leverage. It offers greater incentives to risk-takers.

4. Monitor your Trades:

Check your positions every day after you start trading. Most trading software tracks deals daily. Make sure you have no pending orders and enough cash for future deals.

5. Practice Emotional Stability Whilst Trading

Beginner forex trading is full of emotional roller coasters and unsolved issues. Should you have waited for greater profits? How did you miss the data on low GDP that lowered your portfolio’s value? Unanswered inquiries might cause misunderstanding. It’s crucial not to get carried away by your trading positions and to maintain an emotional balance between profits and losses. When required, close positions.

Other Trading Terminology you should know:

Bear market:

A bear market is when prices of currencies go down. Bear markets are times when the market is going down.

They can be caused by bad economic fundamentals or huge events, like a financial crisis or a natural disaster.

Bull market:

A bull market is when all currencies’ prices go up. Bull markets are when the market is going up and are caused by good news about the world economy.

Contract for difference:

A contract for difference (CFD) is a derivative that lets traders bet on price changes for currencies without owning the underlying asset. If a trader thinks the price of a certain currency pair will go up, they will buy CFDs for that pair. If they think the price will go down, they will sell CFDs for that pair. Because leverage is used in forex trading, a bad CFD trade can lead to big losses.


Leverage is when you use money you didn’t pay for to make more money. High leverages are typical of the forex market, and traders often use them to improve their positions.

Lot size:

When currencies are traded, they are done in standard amounts called “lots.” Standard, mini, micro, and nano are the four most common sizes of lots. The standard size of a lot is 100,000 of the currency.

Mini lots

are made up of 10,000 units of the currency, and micro lots are made up of 1,000 units. Traders can also buy currencies in small amounts called “nano lots,” which are worth 100 units of the currency. The choice of lot size has a big effect on how much money the trade makes or loses overall. The bigger the size of the lot, the more money you can make (or lose), and vice versa.

 Trading Strategies you should learn:

A long trade and a short trade are the most basic types of forex trades. In a long trade, the trader bets that the price of the currency will go up in the future, which will make them money. A short trade is a bet that the price of the currency pair will go down in the future. Traders can also fine-tune their approach to trading by using trading strategies based on technical analysis, such as breakout and moving average.

Trading strategies can be divided into four more types based on how long they last and how many times they are used:

Scalp trading

The positions in a scalp trade are only held for a few seconds or minutes at most, and the number of pips that can be made is limited. The idea behind these kinds of trades is that small profits from each trade add up to a nice sum at the end of a day or other time period. They depend on price swings being predictable and can’t handle a lot of change. So, traders tend to only do these kinds of trades with the most liquid pairs and during the busiest times of the day.

Day trading

Day trades are short-term trades in which positions are held and sold in the same day. A day trade can last for hours or just a few minutes. To make the most money, day traders need to know how to use technical analysis and important technical indicators. Day trades, like scalp trades, are based on making small gains over the course of the day.

Swing trading

In a swing trade, the trader holds the position for more than a day. They may hold the position for days or weeks. Swing trades can be helpful when governments make big announcements or when the economy is in a bad spot. Since swing trades last for a longer period of time, you don’t have to keep an eye on the markets all day long. In addition to technical analysis, swing traders should be able to predict how changes in the economy and government will affect the price of a currency.

Position trade

In a position trade, the trader keeps the currency for a long time, like months or even years. This type of trade requires more skills in fundamental analysis because it needs to be based on a good reason.


3 Types of Charts Used in Forex Trading

Candlesticks Charts

In the 1800s, Japanese rice traders were the first people to use candlestick charts. They look better and are easier to read than the charts we just talked about. The top of a candle shows the opening price and the highest price point for a currency. The bottom of a candle shows the closing price and the lowest price point. A down candle is colored red or black to show a time when prices went down, while an up candle is colored green or white to show a time when prices went up.

Traders use the formations and shapes in candlestick charts to figure out how and where the market is moving. Hanging man and shooting star are two common patterns on candlestick charts.

Line Charts

Line charts are used to see how a currency is moving in the big picture. They are the most common and basic kind of chart that forex traders use. They show the last price that the currency traded for during the time period chosen by the user. Traders can use the trend lines shown in a line chart to come up with trading plans. For instance, you can use the information in a trend line to find breakouts or a change in the trend of prices going up or down.

Even though it can be helpful, a line chart is usually just the first step in a more in-depth analysis of trading.


Bar Charts

Bar charts are used to show certain time periods for trading, just like they are used in other ways. They show more information about prices than line charts. Each bar chart shows the opening price, highest price, lowest price, and closing price (OHLC) for a trade over the course of one day. The opening price for the day is shown by a dash on the left, and the closing price is shown by a dash on the right. Colors are sometimes used to show how prices change. Green or white is used when prices are going up, and red or black is used when prices are going down.

When it comes to trading currencies, bar charts show whether it is a buyer’s market or a seller’s market.



How do I become a forex trader?

  • Learn how to trade.
  • You can set up a demo account to practice trading forex in real conditions but with fake money.
  • Set goals that are attainable, based on a trading strategy that suites your trading style
  • Trade certain pairs of currencies which interest you, preferably Majors as there is much more news about this that influences the price
  • Get help from a professional, alternatively reputable forex broker who provides trading signals and news analysis.
  • Use good platforms for trading,  Metarader 4 ( MT4) or  Metarader 5 ( MT5) are the most commonly used trading platforms.
  • Learn to use indicators and indicators in metatrader which helps you identify trends buy and sell signals in the chart patterns.
  • Keep practicing and learning.

Is Forex Trading Regulated?

The biggest market for forex trades is in Europe & the UK.
Cyprus Securities and Exchange Commission (CySec) is the popular regulatory body for brokers in Europe.
The Financial Conduct Authority (FCA) is regulating body for brokers in the UK.
The Australian Securities and Investments Commission (ASIC) is the regulator of Australia’s markets and financial services.

The U.S. has well-developed infrastructure and markets for foreign exchange trades. So, the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) keep a close eye on forex trades there (CFTC).

Dubai, UAE has a number of regulatory bodies namely: Dubai Multi Commodities Centre (DMCC), The Dubai Gold & Commodities Exchange (DGCX)  & the Dubai Financial Services Authority (DFSA). For the UAE, the Emirates Securities and Commodities Authority (SCA)

Other popular Regulators are:

The Financial Services Authority (FSA) in Seychelles is responsible for the regulation of non-bank financial services to protect civilian interests.

The International Financial Services Commission (IFSC) is the Belize government agency responsible for financial regulation.  for financial market,  exchanges, and the setting and enforcing of financial regulations.

The BVI Financial Services Commission is an autonomous regulatory authority responsible for the regulation, supervision and inspection of all the British Virgin Islands financial services.

The rules for forex trading depending on where you live but because of how much leverage is used in forex trades, developing countries like India and China limit the firms and capital that can be used in forex trades.



Min. Deposit:




From $1, €10


From 1 pip


From $1

From 1:1 - 1:1000

From 0-7 pip



Up to 1:500*

Floating spread from 0 pips



Up to 1:500

From 0-0.4 pip


From $1 - $200

From 1:100 -  1:2000

From 0-1 pip



From 1:1 to 1:500

From 0.0 pips



From 1:30 - 1:500*

From 0.0 pips



Up to 1:500*

From 0.4 pips


How can I start trading Forex: foreign currencies?

The first step in forex trading is to learn how the market works and what terms are used. Next, you need to make a trading plan based on how much money you have and how much risk you are willing to take. Lastly, you should open an account with a broker. It is now easier than ever to open and fund an online forex account and start trading currencies.

How do I start trading in foreign currencies?

The first step in forex trading is to learn how the market works and what terms are used. Next, you need to make a trading plan based on how much money you have and how much risk you are willing to take. Lastly, you should open an account with a broker. It is now easier than ever to open and fund an online forex account and start trading currencies.

How is the forex market regulated?

Forex is regulated by global supervisory bodies, which set rules that all brokers in their area must follow. Some of these standards are getting registered and licensed with the governing body, going through regular audits, telling clients about changes in service, and more.

In forex trading, what are gaps?

Gaps happen when prices go up or down quickly with little or no trading in between. This makes a “gap” in the normal pattern of prices. Gaps do happen in the forex market, but they happen much less often than in other markets because forex is traded 24 hours a day, five days a week.

But gaps can happen when unexpected economic data is released or when trading starts back up after the weekend or a holiday. Even though speculative trading isn’t allowed on the forex market over the weekend, central banks and other related organizations can still trade there. So, it is possible that the price when the market opens on Monday morning will be different from the price when it closed on Saturday morning. This is called a gap.

How much does it cost to get into forex trading?

How much it costs to trade foreign currencies depends on which currency pairs you buy or sell. With IG, you can trade forex on margin, which means you only need a small portion of the full value of the trade to open and keep your position. Margin is not a direct cost to you, but it has a big effect on how much your trade will cost you.

You also have to pay the spread, which is the difference between the “buy” and “sell” prices of an asset. To open a long position, you would trade slightly above the market price (buy price), and to open a short position, you would trade slightly below the market price (sell price).

Lastly, you will have to pay overnight funding charges if you don’t close your position by the end of the trading day.

When should you trade on the forex market?

The best time to trade forex will depend on how much risk you are willing to take. This is because forex prices can be affected by both high liquidity and volatility. When the London session starts at 3am (EST), traders will likely start talking to each other, which will increase liquidity and volatility. After a few hours, trading will usually slow down, but it will pick up again when the American session starts at around 9:30 am (EST).

The foreign exchange market is open all day, every day, from 3 a.m. on Sunday to 5 p.m. on Friday (EST). So, you can trade when it’s convenient for you and take advantage of different busy times.

Remember that when some countries switch to daylight savings time, the opening hours of the forex market will change.


How do I open an account for Forex Trading?

Choose a forex broker that fits you best.
You could also open a demo account to try out our award-winning platform and get better at trading forex.

Recommended Online Brokers for Stock Trading in India

IC Markets