Forex Trading The Most Popular Way to Invest in World Markets

The Foreign exchange or forex market is the buying and selling of currencies, and one of the fastest growing markets. With a daily turnover volume of roughly 4 Trillion US Dollars, it is also the largest and most liquid financial market in the world. Forex trading works much like it does with stock trading — you buy low and sell high. You can trade forex conveniently online 24 hours a day, 5 days a week. Forex trading is suited to new investors as well as long-term investors who wish to diversify their portfolios.

No Re-quotes or Shading of Prices

At 5 Markets, we are a broker with no dealing desk, in other words, we are not a market maker. Because we use fully STP technology, there are no re-quotes and no shading of prices. Instead, at 5 Markets, we execute all your orders and we only profit from your trading volume. Working in conjunction with the high-end banking community ensures consistent liquidity in all currencies.

The Basics of Forex

Forex is a unique market, growing in popularity. Investors view Forex as a wise choice for multiple reasons, including the fact that markets are open around the world 24 hours a day from 00:00 Monday GMT through 22:00 Friday GMT. Also, Forex enables multiple investment strategies. Investors who are looking for short-term gains can buy and sell currencies within hours, minutes, or even less. Those who hope a long-term strategy will pay off can choose to buy and hold an exchange. All this is easily accomplished — often for an investment that is far lower than the value of the trade.

Profiting from Forex Trading

Trading in currency is similar to stock investments. Theoretically, stocks are bought low and sold high. When successful, this can lead to significant profits. Forex trading is similar in nature, however it generally requires less research and a smaller risk. The investor simply needs to make a judgment about whether or not one currency will outperform another.

Forex trading is a practical way to begin or enhance ones investment portfolio. The possibilities for both short and long-term gains are significant, while the risks are relatively small as long as the proper amount of research has been conducted in both the currency exchange and the brokerage service.

Key Trading Terminology

Pips and Lots

The percentage in point, or pip, represents the difference between the value of two different currencies. More simply put, currency exchanges constantly fluctuate. Sometimes these differences are very substantial, but more often they are slight in nature. A pip is measured at 1/100th of a percent. Because these currency fluctuations can be modest, trading is carried out in lots. Standard lots measure 100,000 units.

Leverage

The average investor does not have the funds to purchase 100,000 units of a given currency. Instead, they go through a forex broker. The broker asks for a smaller deposit, usually between $1,000 to $10,000 and then allows the investor to purchase currencies using funds that are essentially borrowed.