What is retail foreign exchange trading?

Retail foreign exchange trading is a segment of the foreign exchange market where investors aim to profit from exchange rates between different currencies.

It’s also known as 'retail Forex trading', and currencies can be bought and sold in seconds.

Since the introduction of online trading, anyone can enter the global marketplace through an online broker and access the same trades as banks and large financial institutions.

Where have you heard about retail foreign exchange trading?

Retail foreign exchange trading hit the news in 2015 when the Swiss National Bank (SNB) removed its €1.200 cap on the Euro without warning.

The value of the Swiss Franc rose 30% causing volatility in the market and huge losses for investors, brokers and banks .

What you need to know about retail foreign exchange trading.

Investors can use a broker’s website to make a trade; betting on the short term direction of exchange rates or currency pairs.

Speculating on the foreign exchange market is attractive to investors as it operates 24 hours a day and isn’t typically impacted by recession.

Foreign exchange risk could cause financial loss if foreign exchange rates change unexpectedly. Investors can hedge their risk using what’s known as an 'automatic stop loss' order, which is an advanced trade order that establishes a predetermined price limit that can’t be exceeded during the trade.