The term ‘forex’ is short for foreign exchange. Forex trading is the process of buying and selling international currencies, with the objective of making a profit from fluctuations in the exchange rates between them.
So you might trade the euro against the US dollar (EUR/USD), for example. Buying the EUR/USD pair means that you are effectively speculating on the euro to increase in price against the dollar. Most currency pairs are priced to the fourth decimal, so a single point (pip) of movement relates to the fourth decimal place.
The FX market is the largest in the world, by global trading volume. It’s open 24/5 and extremely liquid, so you can normally enter and exit trades whenever you want to. The high liquidity also means that spreads tend to be tighter than some less-liquid asset classes, so the underlying market won’t have to move too far in a positive direction before your trade is in profit.
While movements in the currency market can be small - less than 1% average daily movement under normal trading conditions - the fact that they are traded to the fourth decimal creates a very fertile trading environment. Leverage offered by trading providers can also amplify retail traders’ exposure by up to 30:1. This means that small moves in the underlying can create large profits or losses.
We offer CFD trading on forex, giving you exposure to the price movements of currency pairs without having to buy a portion of them outright. You can trade over 120 currency pairs with us, going short just as easily as long.
Identify potential entry and exit points with our smart, intuitive charting tools, and set price alerts to notify you of significant market moves. Protect yourself against adverse market moves with our range of risk-management tools, including trailing stops which lock in positive market moves while protecting against losses.*
Learn more about forex trading
*Stop-losses may not be guaranteed.
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1 Figures presented relate to Capital Com Group