Trade forex CFDs with IG

Forex trading means exchanging one currency for another. Forex is always traded in pairs which means that you’re selling one to buy another.

There is no difference between forex trading and currency trading, as both mean that you’re exchanging one currency for another. When forex trading or currency trading, you’re attempting to earn a profit by taking a position on whether the price of a currency pair will rise or fall.

You can make money from forex trading by correctly predicting a currency pair’s price movements and opening a position that stands to profit. For example, if you think that a pair will decline in value, you could go short and profit from a market falling.

Alternatively, if you think a pair will increase in value, you can go long and profit from an increasing market.

You can get started trading FX with a forex trading account. Plus, you’ll also need to be familiar with what moves the forex market – like central bank announcements, news reports and market sentiment – and take steps to manage your risk accordingly. With us, you’ll trade FX via CFDs. You can always try out trading FX with our demo account first.

The costs and fees you pay when trading currency will vary from broker to broker. But, you should bear in mind that you’ll often be trading currency with leverage, which will reduce the initial amount of money that you’ll need to open a position. Be aware though that leverage can increase both your profits and your losses.

Approximately $6.6 trillion worth of forex transactions take place daily, which is an average of $250 billion per hour. The market is largely made up of institutions, corporations, governments and currency speculators – speculation makes up roughly 90% of trading volume and a large majority of this is concentrated on the US dollar, euro and yen.

Despite the enormous size of the forex market, there is very little regulation because there is no governing body to police it 24/7. Instead, there are several national trading bodies around the world who supervise domestic forex trading, as well as other markets, to ensure that all forex providers adhere to certain standards. For example, in Australia, the regulatory body is the Australian Securities and Investments Commission (ASIC).

Gaps are points in a market when there is a sharp movement up or down with little or no trading in between, resulting in a ‘gap’ in the normal price pattern. Gaps do occur in the forex market, but they are significantly less common than in other markets because it is traded 24 hours a day, five days a week.

However, gapping can occur when economic data is released that comes as a surprise to markets, or when trading resumes after the weekend or a holiday. Although the forex market is closed to speculative trading over the weekend, the market is still open to central banks and related organisations. So, it is possible that the opening price on a Sunday evening will be different from the closing price on the previous Friday night – resulting in a gap.

To start trading forex, you’ll need to make sure there is enough capital in your trading account. Unlike the stock market, there is no enforced minimum. This means that your required capital can be based on your goals and trading style, but it is often suggested that traders shouldn’t risk more than 1% of their account on each trade. For example, if your account contains AUD$10,000, then you may decide not to risk more than AUD$100 on a single trade.

Once you have established how much capital you have available, you will then need to start preparing the rest of your forex trading plan – this should include when you want to get out of your trade, the time you are willing to commit to trading, researching which markets you want to trade, your risk management strategy and your trading strategy.

Whether you’re completely new to trading or have traded other markets before, the volatility of the forex market is a very unique environment that takes time to understand. However, anyone can trade forex if they develop their trading knowledge, build a forex trading strategy and gain experience trading the market.

A forex trading strategy should take into account the style of trading that best suits your goals and available time. For example, day trading is a strategy that involves opening and closing positions generally within a single trading day, taking advantage of small movements in the price of a currency pair. On the other hand, position trading is the strategy of holding positions open for a longer amount of time to take advantage of major price movements. Both have different time commitments and different techniques needed for success.

The nature of the forex market is extremely volatile, so a currency pair that moves a lot one week, might show very little price movement the next. However, the majority of forex trading volume is found on a handful of forex pairs, including EUR/USD, UDS/JPY, GBP/USD, AUD/USD and USD/CHF – because these pairs attract the most traders, they often see the most movement.

If you want to keep up to date with the most recent forex price movements, visit our news and trade ideas section.

Although there are multiple benefits of forex trading, the volatility of the market and the leveraged trading instruments do come with increased risk. However, there are a variety of ways that you can manage your currency risk, such as attaching stops and limits to your position, setting price alerts and using a trading style that matches your attitude to risk.

There are two ways to trade forex: CFD trading and trading via a forex broker. Both are speculative, which enable you to trade on the future direction of a forex pair’s price, without having to take ownership or delivery of the physical currency.

The easiest forex pair to trade will vary from trader to trader, depending on their interests and attitude to risk. A good place for beginners to start would be the major forex pairs that have a larger trading volume, which makes them far more liquid and potentially less volatile.

The most traded currency pairs are the major crosses, including EUR/USD, USD/JPY, GBP/USD and USD/CHF. For those just starting to trade the forex market, it is important to understand that the majority of forex trading is concentrated across these combinations, which can make them easier to trade as they have higher liquidity.

You can trade forex CFDs with direct market access via IG’s web-based trading platform and L2 Dealer platform. You can also trade with DMA via the IG mobile platforms for iOS and Android if you have set up your permissions by speaking to one of our consultants over the phone. It is also important to build a suitable forex trading strategy and implement a risk management strategy to minimise currency risk.

DMA displays the best bid and offer price available for a particular forex pair, plus further prices on either side of the order book. You would then select your favoured price and place an order. Once we have checked you have sufficient funds to cover the margin, we place an order in the forex market and, at the same time, create a parallel forex CFD between you and us.

Remember, because you are trading CFDs, you are not taking ownership of the currency itself.

With DMA, you can use our technology and gain access to a range of benefits that IG provides. Unlike DMA, sponsored access trading uses the technology, but does not pass through the broker or provider’s management systems – instead the order is validated by the exchange itself. This means that there is no pre-trade risk management, or other advice from your provider.