Top Forex Exchange Questions And Answers

Academy

Accounts:

How do I open a trading account?

You are eligible If you are 18 or over and have your own bank account, you may open an online trading account with Top Forex Exchange by clicking on the New User link above our top menu or open an account on our home page.
What is Forex trading?

Foreign exchange trading, also referred to as Forex, FX, and Spot FX trading entails the purchase of one currency and sale of another, and it represents the largest financial trading market in the world. The Forex market is open 24-hours a day, 5-days a week and its liquidity is estimated at greater than $4 Trillion in daily turnover – more than the total volume of the global stock markets on any given day. Find out more in our trading academy

What is the difference between Forex and traditional stock or mutual fund trading?

Forex (Foreign exchange) trading and conventional stocks are different types of trading. When trading currencies, most traders' objectives are to predict short-term movement in the currency exchange values. Much foreign exchange trading is done in day-trading style where traders will buy and sell on the same day. In contrast, stocks and mutual funds trading are more of a medium-to-long term style holding where trades may last for years.  

How many currency pairs can I trade?

Top Forex Exchange offers over 140 currency pairs, indices, commodities and stocks. At any moment, depending on which markets are open in any specific location on the globe, you may trade on most of these products.  

When Can Currencies Be Traded?

The spot FX (foreign exchange) market is unique among world markets as it is open 24-hours a day. Forex is the market that never sleeps , somewhere around the world, a financial center is open for business, meaning banks and other institutions exchange currencies every hour of the day and night, with relatively short gaps on the weekend. This provides maximum flexibility for traders

Time Zone

EST

GMT

Tokyo Open

19:00

0:00

Tokyo Close

04:00

9:00

London Open

03:00

8:00

London Close

12:00

17:00

New York Open

08:00

13:00

New York Close

17:00

22:00

Can I trade on Bitcoins?

Top Forex Exchange investors can trade on

What is Spread?

Spread is the difference between the sell (bid) and buy (ask) price of a currency pair. In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread.  

What is a Lot?

Forex positions are measured in lots. A standard lot equals 100,000 units of the traded currency pair; a mini lot equals 10,000 units; and a micro lot equals 1,000 units.  

What is a Pip?

Also known as a point, PIP stands for Percentage In Point. A pip is the basic unit of measurement that denotes changes in price in foreign exchange instruments.  For most currencies the pip is the equivalent of 1/100 of 1%, but there are certain exceptions, namely pairs that include the Japanese Yen for which the pip is the second point after the decimal.

USD/JPY at a rate of 119.80 (.01 / 119.80) x 100,000 = $8.34 per pip USD/CHF at a rate of 1.4555 (.0001 / 1.4555) x 100,000 = $6.87 per pip in cases where the US Dollar is quoted second, the formula is slightly different. EUR/USD at a rate of 1.1930 (.0001 / 1.1930) X 100,000 = 8.38 x 1.1930 = $9.99734 rounded up to $10 per pip GBP/USD at a rate of 1.8040 (.0001 / 1.8040) x 100,000 = 5.54 x 1.8040 = $9.99416rounded up to $10 per pip

What are 'long' or 'short' positions?

A Long Position is one in which the trader will profit from an increase in price; i.e. buys low, sells high. A Short Position is one in which the trader will profit from a decrease in price; i.e. sells high, buys back low.  

What is Leverage?

Leverage is the ratio between a trader’s investment (margin deposit) in a position and the broker’s contribution. Thus, using a small investment, the trader invests in a much larger total contract value – enabling him or her to magnify gains and losses. Leverage of 200 to 1 enables investment of $50 in a contract worth (50 x 200=) $10,000. Leverage, however, can lead to large losses as well.  

What is Margin?

Margin is the amount of collateral in a trading account required to open or maintain a position. If an open positions worsen and the account does not have enough usable margin that can cover potential losses, the system will initiate a margin call. The customer must then deposit funds to maintain the positions or else the system will close the position. The system automatically calculates margin requirements for current positions and checks for available margin at all times.  

What is a Margin Call?

In the event that usable margin falls below required margin, the broker’s system will begin to close positions. This protects the client from falling into negative balance.  

What are stop loss, take profit and trailing stops?

A “stop loss” order is an instruction to close a position when it reaches a certain level. It is applied to prevent losses beyond a certain level. A “take profit” order is also an instruction to close a position when it reaches a certain level. It is applied to ensure profiting at a point beyond which you fear a favorable trend may reverse. A “trailing stop” will determine a margin of safety below a stop-loss order or above a take-profit order, enabling the system to automatically keep a profitable position open or close a losing one at a predetermined percentage distance from your entered order.  

What is Rollover?

Foreign exchange transactions, as a rule, are usually settled within two business days (the value date). Rolling over a transaction is chargeable, based on the interest rate differential between the currency pair constituents. If you purchased a pair with a higher rate of interest, you will earn interest. If you sold the pair with a higher rate of interest, you will pay interest. Most positions are rolled over automatically.  

What is a Swap?

Currency swap is the concurrent sale and purchase of the same amount of a specific currency at a forward exchange rate.  

What is the difference between an intra-day and an overnight trading position?

Positions opened within a 24-hour period after the close of a broker’s normal trading hours are intraday trading positions. Overnight trading positions are those positions that are still open at the end of trading hours. These are automatically rolled over by the broker. 

When is it best to trade Forex ?

It is assumed that the best time to trade the Forex market is when the London and New York markets overlap. This is when the most amount of traders, and biggest banks, are active. It is widely considered the most profitable time to trade.  


Risk Warning: Trading Foreign Exchange (Forex) and Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. FX and CFDs carry a high level of risk since leverage can work both to your advantage and disadvantage. As a result, CFDs may not be suitable for all investors because you may lose all your invested capital. You should not risk more than you are prepared to lose. Before deciding to trade, you need to ensure that you understand the risks involved considering your investment objectives and level of experience. Seek independent advice, if necessary.

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