Our Trading for Beginners section gives you all the information you need to start trading forex and CFDs with confidence.This should be your first stop to find out about currency pairs, how the forex market works, market analysis and CFD instruments.
Learn about the global FX market, currency pairs and how a trade works. Here you’ll also find descriptions of some of the common online forex trading concepts such as order types, rollovers and hedging.
- What is Foreign Exchange?
- Foreign exchange, more commonly known as Forex or FX, relates to buying and selling currencies with the purpose of making profit of the changes in their value.
- Currency Pairs
- When going to a store to buy groceries, we need to exchange one valuable asset for another. The same goes for trading forex – we buy or sell one currency for the other. The currencies in the pairs are referred to as one against another.
Usually a quote will be presented with four numbers after the dot, for instance 1.2356. In the case of EURUSD it means for every Euro the trader wishes to buy he will have to invest 1.2356 US dollars. Any change in the currency value will usually be seen on the fourth figure after the dot, mainly known as a pip. The spreads, gains and losses will usually be presented in pips.
There are three types of forex pairs; Major pairs, Minor pairs and Exotic pairs.
The major pairs always involve the USD, and are the most traded ones.
The seven major pairs are EURUSD, USDJPY, GBPUSD, USDCAD, USDCHF, AUDUSD and NZDUSD. In the minor pairs the major currencies are traded between each other, excluding the USD. These can be EURGBP, CHFJPY and others.
The exotic pairs have one major currency and one minor, such as EURTRY, USDNOK and many more.
- The Forex Market
- With approximately $4 trillion USD traded in the market every day, the forex market has the highest liquidity in the world.
Basically, this means that one can buy almost any currency you wishes in high volumes while the market is open. The forex market is open 24 hours, 5 days a week – Monday to Friday. Trading begins with the opening of the market in Australia, Asia, Europe to follow and then the USA until the markets close.
- What affects the Forex Market?
- There are many factors that affect the exchange rate in the foreign exchange market, such as political and economic stability, the country's monetary policy, etc.; however, because foreign exchange transactions are immediate, the changes in the market exchange rate are mainly speculative (or expected psychology).
If a trader expects that a certain reason or event will cause a certain currency to become stronger or weaker, they will trade and change the market (price); just like the relationship between supply and demand, the relevant currency will change in the market. The more people believe that a certain trend will occur, the greater its impact on market conditions (prices).
- How to trade forex?
- Foreign exchange must be traded in pairs, that is, one currency must be used to buy and sell another currency. For example, if you expect the British pound (GBP) to strengthen against the U.S. dollar, you should buy (move) into the GBPUSD (GBPUSD) currency pair group; if you expect the opposite trend (that is, the U.S. dollar will strengthen), then sell the currency Pair group.
Therefore, you can hold positions in the expected direction of the market trend; this can increase your trading opportunities.
- Why Trade Forex with FairLane?
- You must have confidence when doing foreign exchange transactions. Profits can never be guaranteed, and any type of trading has its advantages and disadvantages, as well as the risk of losing funds. At FairLane we are committed to a set of values which define our relationship with our customers. As such, we provide the best trading experience possible, offering the most advanced and user-friendly trading platforms.
Currency trading is the most liquid and robust market in the world. In fact, no other market can compare to the sheer value of this massively traded market. Estimates peg the value of currency trading at around $5 trillion per day, a figure that far outstrips the value of all stock market trading in the world.
- The Basics of Currency Trading
- When you’re trading currency pairs, you’re effectively buying one currency and selling the other currency.Let’s take a simple example to illustrate how this works: the EUR/USD is a commonly traded currency pair. The EUR is the symbol for the Euro and the USD is the symbol for the US Dollar. In the above currency pair, the EUR is referred to as the base currency and the USD is referred to as the quote currency. The ratio is actually viewed as a single unit, even though it refers to 2 individual currencies. In other words, you trade the EUR/USD currency pair – not the EUR or the USD. Let us further clarify this basic currency trading example by adding in a few figures. If we assume that the EUR/USD is trading at 1.25345, this means that every €1 = $1.25. In other words the Euro is stronger than the dollar, or conversely you would need more dollars to buy euros.
A Few Basic Terms in Currency Trading
- Major Currency Pair
- When you trade currency pairs, you will encounter six major currency pairs in your daily trades. These include the GBP/USD, USD/CHF, USD/JPY, USD/CAD, AUD/USD and EUR/USD. Simply put, these are the most actively traded currency pairs in the world, and they are more likely to have greater volatility. When you trade major currency pairs at Fair Lane you are guaranteed low spreads – another great reason to trade with us.
- Minor Currency Pair
- Minor Pairs by contrast are those currency pairs that are less traded than the major currency pairs. They are less liquid than the major currency pairs and they often have wider spreads. As a general rule, minor currency pairs are any pairs other than the six major currency pairs listed above. Here at Fair Lane, we’ve got a wide selection of minor currency pairs for you to trade.
- Exotic Currency Pair
- Exotic currency pairs typically include a currency from an emerging market country. The reason that they are called exotic currency pairs has nothing to do with the location of the country, but rather the additional challenges involved in trading these currency pairs. Exotic currency pairs are generally illiquid, with wider spreads and fewer market-makers. Examples of exotic currency pairs include the South African Rand (ZAR), the Hong Kong Dollar (HKD) and the Mexican Peso (MXN).
Now that you’ve got the scoop on online currency trading,open an account at FAIR LANE to begin trading your favourite major, minor and exotic currency pairs today.
Technical analysis is an important factor in making smart trading decisions, whether you’re trading forex, commodities, stocks or indices. Find out more about the tools and techniques you need to understand and analyse live charts so that you stand the best possible chance of succeeding in the markets.
- What is technical analysis？
- Technical analysis is the study of historical data and chart in order for traders to make better educated trades.
Please note, past performance is not always a reliable guide to future performance.
- Forex Market Term
- There are 3 basic types of trends
- Short term
- Intermediate term
- Long term
First, one must decide the type of trader/investor that they are. You must decide whether or not you hold positions for a long time or buy and sell fast. That decision will determine which charts you should be using. Day traders or those who invest in and out of positions fast will use daily and intraday charts more than investors who buy and hold for long period of times.
- Support and Resistance Levels
A support level could be the previous low. The resistance level could be the previous day’s high point, or better known as a peak. After a resistance level has been broken, it will usually become a support level should the instrument you are trading declines again. When the instrument moves down and breaks the support, then this becomes the new low. Looking at it the other way if the instrument moves higher through the resistance level, this becomes the new high.
Retracements are percentages. During any given day (open to markets), the instrument you are watching or investing in, will usually retrace previous day’s trades. No matter if they are up or down. The most common used is fifty percent. We also use the one third, 38% and 2/3 levels.
- Trend Lines
The easiest way to begin your analysis is by learning and applying trend lines. First thing you must do is to draw a straight line that joins two points on your chart. To show a trend line that is increasing, connect two lows in a row and for a trend line that is decreasing, connect two straight peaks. You will note that usually, the market (price) will pull back towards a trend line before resuming a trend. When the price breaks a trend line, this is the end of a trend. The longer a trend line the more it has been tested and the more important it is. Note that a trend line becomes valid when the market touches it 3 times.
- Moving Averages
When you are looking for buy and sell signals, one looks at moving averages. These averages will tell you if an existing trend is still in play. Beware: these do not predict trend changes. Traders usually use two moving averages. Movements above and below the 20 and 40 day averages are very popular. 5 and 20 day averages are very popular for those who trade quickly.
In order to identify overbought or oversold conditions in markets, oscillators are commonly used. These often warn a trader that a market has either risen or the market has fallen too far and a change is imminent. The Relative Strength Index or RSI and the Stochastics are the most popular oscillators a trader will use. Now, these scales are from 0 to 100. The RSI: if the scale is over 70, means it is overbought. If the scale is below 30, it is oversold. For Stochastics overbought is 80 and oversold is 20.
Contracts for Difference – more commonly known as CFDs – are an important financial instrument that allows traders to speculate on the rising and falling value of currencies, indices, commodities and stocks without owning the underlying asset. Here you can find out more about the various features of CFDs and how they work.
- What is a CFD?
- Contracts For Difference (CFDs) are specialised and popular Over The Counter (OTC) financial derivative products which enable you to trade on the price movement of financial assets Indices Futures, Commodity Futures, Shares and Exchange Traded Funds.
They enable clients to trade freely without actually owning the underlying asset or acquiring any rights or obligations in relation to the underlying asset. The main benefit of trading CFDs is the flexibility to trade against the price movements without actually buying or selling the physical instrument.
Fair Lane’s CFDs derive their price from the underlying asset. You can trade CFDs if you believe the price of a financial instrument is likely to go up in value (strengthen) and if you think it is likely to go down (weaken). Your profit or loss in online CFD trading is determined by the difference between the price you buy at and the price at which you sell.
CFD Trading Methods There are various trading strategies that are often used when trading CFDs, that even the most unskilled trader can understand. These decisions involve a number of trading methods and the most popular are the Long vs. Short
Short term trades can allow profits from short time spans even up to minute-to-minute moves. Limiting financial costs is an advantage in short term trading.
InterTrader This would be a happy medium that offers both undated futures and contracts and can be traded on short or long term CFD strategies.