Forex and forex forwards trading

Forex trading involves buying one currency while simultaneously selling another, reflecting expectations about how exchange rates will move relative to each other. Currency pairs are priced to four decimal places — one pip, a one-point move in the fourth decimal, is the unit by which movements are measured and spreads are expressed.

Forex forward contracts allow positions to be taken on expected future exchange rates rather than current spot prices. This makes forwards relevant for longer-term positioning or hedging currency exposure, as distinct from spot forex which reflects the current market price.

Both can be traded as CFDs — contracts that track the underlying exchange rate without requiring the buying or selling of the currencies themselves.

The forex market is the largest globally by trading volume. It operates 24 hours a day, five days a week, and is highly liquid, allowing positions to be entered and exited throughout the trading day.

High liquidity often results in tighter spreads than less liquid markets. Currency movements are typically small, but pricing to the fourth decimal place creates frequent trading opportunities.

Leverage is typically available on forex and other derivatives, increasing exposure to these movements while also increasing risk.

Forex liquidity changes across market sessions, and bid/ask spreads can widen during quieter periods, session handovers or major economic news. Traders can review how currency pairs, trading hours, economic calendar releases, trend or range conditions and basic technical indicators may affect entry price and risk. Before trading forex CFDs, it’s also useful to check margin requirement, overnight funding and whether the pair is available on the intended platform for your account type and region.

Capital.com offers CFDs on 120+ currency pairs — both spot forex and forex forwards — with transparent spreads and adjustable leverage. The full cost is visible before any position opens.

The forex market runs across four global sessions with different liquidity characteristics throughout the day. Price alerts configured to relevant levels mean significant moves are flagged without requiring constant monitoring across every session.

Learn more about forex trading.