Forex trading, the term foreign exchange (also known as forex) refers to the global over-the-counter market in which traders, investors, institutions, and banks exchange, speculate on, buy and sell the world’s currencies.
Trade forex at AvaTrade
Forex trading takes place in the interbank market at AvaTrade, which is an online channel through which currencies are traded 24 hours a day, five days a week. Daily trading in this market exceeds $ 5 trillion worldwide.
Understanding AvaTrade’s currency pairs
All transactions entered into in the forex market involving the simultaneous purchase and sale of two currencies.
These two currencies are called the “currency pair”, and the currency pair consists of a base currency and a quote currency. The next screen shows the EUR / USD (EUR / USD pair), which is one of the most popular currency pairs in the forex market.
The asking price
The asking price is the price at which a trader is selling currency.
The asking price is displayed in real-time and is constantly changing driven by demand from the market, as well as political and economic factors that affect the value of each currency separately.
What are the most traded currency pairs in the forex market?
There are seven major currency pairs in the forex market.
There are also other classes of currency pairs, including the derivative currency pairs and exotic currency pairs, which are less common in trading, and all are relatively illiquid (that is, it is not easy to exchange them for liquid cash).
Major couples
The majors are the most popular pairs and contribute about 80% of the trading volume in the Forex market.
Typically, these pairs have low volatility and high liquidity.
These currencies are associated with stable, well-managed economies, are less prone to manipulation, and have lower spreads than other currency pairs.
Derivative currency pairs
Derivative Currency Pairs – are pairs that do not include the US dollar.
Derivative currency pairs were converted first to the US dollar, then into the desired currency, but now the conversion is straightforward.
As for the most popular derivative pairs, they are those derived from minor currencies (such as EUR / GBP, EUR / JPY, GBP / JPY), and these pairs are usually less liquid and more volatile than the major currency pairs.
Exotic currency pairs
Exotic currencies are currencies from emerging or smaller economies that exist in a single pair with a major currency.
Exotic pairs carry a higher amount of risk when compared to the majors and derivatives, as they are less liquid, more volatile, and more prone to manipulation.
The price difference for these pairs also widens, and they are more sensitive to sudden changes in light of political and financial developments.
How to start trading forex at AvaTrade
Look for a regulated broker with at least 5 years of experience. If the broker is regulated, you can rest assured of its legality. Once you have an active account, you can start trading, but you will need to deposit some money to cover the costs of trading deals, and this amount is called account margin.
Learn to trade forex at AvaTrade
Learning to trade forex is the first step for any successful trader. They have many different types of educational materials available for traders from beginners, mediocre to advanced.
Mobile trading applications
Almost every trading company offers its own mobile trading app. This can be useful if you intend to trade with a handheld device. Most traders will likely find themselves inspecting deals while they are away from their desks, so you may want to download the broker’s mobile trading application and see how much you like using it with a demo account when you are going to decide which broker to open a real money account with, and this is what you will find at AvaTrade.
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