Where to start
New to Forex?
If you’re new to foreign exchange, or forex, as it is commonly known, you’re probably wondering what makes it different from stock exchanges. Forex is both similar and different to stock exchanges. Here are some of the main differences.
The basics
Forex and the stock market.
Unlike the stock market, where money is traded for shares in a company’s stock, Forex is all about trading one type of currency for another. In both markets, you make money by following the same principle: buying low and selling high. However, the forex market differs from the stock market in that going long (betting on a rising price) or short (betting on a falling price) is equally easy.
You may have experience as a forex trader and not even know it: anyone who has traveled to another country and exchanged their home currency for the local currency has traded forex! Of course, the global forex market operates on a much larger scale, involving importers and exporters, multinational corporations, portfolio managers, hedge funds, and speculators. Some of these players are doing business in other countries, some are hedging one currency against another in order to prevent losses, and some are engaged in currency speculation – trying to predict and profit from favorable currency movements.
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Start trading in 3 easy steps.
Open a live account, or test all the features of the trading platform first with a free demo account.
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- Open a live accountStep 1
- Upload required documents for KYCStep 2
- Deposit funds to your accountStep 3
Foreign Exchange 101
Useful facts before you start.
The forex market is one of the most exciting and trader-friendly markets in the world. Here are some other useful facts to know if you’d like to become a forex trader.
The Forex Market Is Huge
Thanks to its sheer size, it is almost impossible for any one person, institution or government to control the forex market for long. At an estimated $3.98 trillion plus, the average daily turnover of the forex market easily trumps that of the New York and London Stock exchanges put together.
The Forex Market Offers 24/5 Accessibility
Forex trades can be made 24 hours a day, 5 days a week. The market runs non-stop from 20:15 GMT on Sunday until 22:00 GMT on Friday.
The Forex Market Has Unrivalled Liquidity
With its massive scale and 24/5 accessibility, forex is exceptionally liquid, making entering and exiting even very large positions comparatively simple. With massive corporations and central banks trading forex, there’s plenty of room for you, too!
There Is No Central Control In Forex
Forex has no centralized market or regulatory control. The Internet makes it easy to participate in forex via computers linked to brokers, banks and other traders around the world. Regulation is administered locally wherever banks and brokerages are registered.
Forex Offers High Leverage
Here at RForex, you can trade with leverage as high as 500:1 if you want. But you don’t have to gear your trades that high if you prefer lower levels of risk.
Trading glossary
Common trading terms, defined plainly.
The words you will meet on a trading platform, in an account statement and on this site.
A
- Ask
- The price at which you can buy. Always the higher of the two prices quoted.
B
- Balance
- Closed-trade cash in the account. It ignores anything still open — see Equity.
- Base currency
- The first currency in a pair. In EUR/USD you are buying or selling the euro.
- Bid
- The price at which you can sell. Always the lower of the two prices quoted.
C
- CFD
- A contract for difference: you settle the change in price, without owning the underlying instrument.
- Carry
- The interest earned or paid for holding a position overnight. Positive one way, negative the other.
- Correlation
- How closely two instruments move together. Four correlated positions are closer to one trade than to four.
- Cross rate
- A pair that does not include the US dollar, such as EUR/GBP.
D
- Depth of market
- The visible resting orders at each price level. Shallow depth is why a large order moves the price.
- Drawdown
- The fall from an account's high-water mark to its low point, expressed as a percentage.
E
- ECN
- A venue that matches client orders against liquidity providers directly, with the broker paid by commission rather than by spread.
- Equity
- Balance plus or minus the profit on open positions. This is the figure margin is measured against.
F
- Free margin
- Equity minus the margin already committed. What is left to open something new, or to absorb a loss.
H
- Hedging
- Holding offsetting positions to reduce exposure. It caps the loss and the gain alike, and still costs the spread.
K
- KYC
- Know Your Customer: the identity and source-of-funds checks a broker completes before you trade.
L
- Leverage
- The ratio between position size and the margin required for it. 1:200 means $500 controls $100,000.
- Limit order
- An instruction to trade at a stated price or better. It may never fill, but it never fills worse.
- Liquidity
- How much can be traded before the price moves. It is not constant: it thins at rollover and around releases.
- Long
- A position that profits if the price rises.
- Lot
- The standard unit of size. One standard lot is 100,000 units of the base currency; a micro lot is 1,000.
M
- Margin
- The deposit held against an open position. It is collateral, not a fee, and it is returned when you close.
- Margin call
- The warning issued when equity falls towards the margin requirement. Ignoring it leads to a stop out.
- Market maker
- A broker that quotes both sides itself and takes the other side of client trades.
- Market order
- An instruction to trade at whatever price is available now. It always fills, but not always where you expected.
O
- OCO
- One-cancels-the-other: two orders linked so that filling one removes the other.
P
- Pip
- The standard increment of a quote — 0.0001 on most pairs, 0.01 on those quoted in yen.
- Pipette
- A tenth of a pip, the fifth decimal on most pairs.
Q
- Quote currency
- The second currency in a pair. It is the one the price and your profit are expressed in.
R
- Requote
- An offer of a different price after you clicked.
- Rollover
- The daily moment at which open positions are carried to the next value date and swap is applied.
S
- Short
- A position that profits if the price falls.
- Slippage
- The difference between the price you asked for and the price you got. It can run both ways.
- Spread
- The gap between bid and ask. It is a cost, paid the moment you open, whatever happens next.
- Stop loss
- A resting order that closes a position once the price passes a level, capping the loss on it.
- Stop out
- The automatic closure of positions when equity falls below the required margin.
- Swap
- The interest debited or credited at rollover, set by the rate differential between the two currencies.
T
- Trailing stop
- A stop that follows the price at a fixed distance while the trade runs in your favour, and stays put when it does not.
V
- Volatility
- How much a price moves over a period. It sets what a sensible stop distance is, and what a position should be sized at.
No term matches that. Try a shorter word.
Educational material only. Nothing on this page is investment advice, a recommendation, or an offer, and it takes no account of your objectives or circumstances. Leveraged products carry a high risk of losing money quickly.