Forex Trading
We offer its traders a secure, cutting-edge and intuitive trading platform that provides a lucrative trading opportunity in Forex.
- Trading in Forex or foreign exchange enables traders to enter a platform that allows one to buy and sell global currencies.
- Whether you are new to the online trading world or a seasoned professional, the customer service and execution provided by your broker is key to your success in the Forex trading market.
What is the Forex Market?
The forex market (foreign exchange or currency trading market) is both big enough and independent enough to resist being governed by any one factor. Different economic, political and also psychological factors will influence it, but none will dominate it. The law of supply and demand plays an important part. When demand goes up for a particular currency (for example, when investors believe that its value is set to increase) or when supply goes down (possibly because of government intervention), the price or exchange rate of that currency tends to go up as well. Similarly, demand that goes down (prospects for the currency are not considered to be good) or supply that goes up (a government printing more money) both tend to depress the exchange rate of that currency.
Opinions change the forex market
The forex market also responds to what people consider (rather than know definitively) to be the relative values of different currencies. Forex traders in particular form their opinions in two ways: “fundamental analysis”; and “technical analysis”. The first is analysis at a macro-economic level. The laws of economics exist and can be applied. Fundamental analysis is also a matter of experience and judgment in assessing for example how developments in countering inflation in a country’s economy will affect the exchange rate of its currency. The second, technical analysis, is analysis at a micro-economic level, taking into account only the past activity and trend of a currency’s exchange rate in order to model and predict what will happen in the future.
Forex market psychology
While it is possible to trade in the forex market using only fundamental or only technical analysis, a combination of the two may yield the most profitable trading results. Traders who are also aware of psychological aspects of the market have an extra advantage. Forex market psychology can be seen in diverse situations, ranging from subdued reaction to economic news to panic buying or selling of particular currencies. An example of a more controlled reaction to economic news is a so-called “flight to safety” movement in the market, when an economic situation suggests that investing in a “safe haven” currency such as the US dollar because of underlying economic strength or the Australian dollar because of its strong correlation with gold (a safe haven commodity) will bring better results than risking investment in more volatile currencies.
Intervention in the forex market
Panic buying or selling of a currency in the forex market may be triggered by news released by a country or a region, but is fueled by other traders following the movement of the first traders. The extent to which a currency can move either up or down will be determined by the economic and political situation of the country concerned, the influence of the country in the global economy and the emotions of forex market traders (fear, doubt, optimism and so on). Governments can influence the exchange rate of their currency by using measures such as changes in central bank interest rates. In extreme cases, a government may intervene to stabilize an exchange rate by buying back its own currency to increase demand, or by fixing albeit temporarily the exchange rate of its currency.