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Education

The basic principles of forex trading

Forex Trading Basics

Forex trading involves buying and selling currencies at different prices,
with the aim of making a profit.

Traders aim to buy when the price is low, and sell when the price is high.

WHAT MOVES THE PRICE?

There are many factors that move the currency markets, including:

Central banks and their interest-rate decisions have arguably the largest influence in exchange rate values.
Also known as fear and greed, if enough traders believe the market is headed in a certain direction they will trade in that direction, driving currency prices either up or down accordingly.
The overall economic climate of a country will directly affect the value of its currency. Stable currency values are usually a reflection of a healthy economy, whereas rising and falling values can represent a booming or stagnating economy respectively.
News releases, whether planned (as per the economic calendar) or unplanned (breaking business/political headlines), can have huge and instantaneous effects on the value of a currency.

TRADING CHARTS

Price movements are recorded on trading charts, using sophisticated charting technology. AltumFx uses MT5, which is the worlds most advanced and most popular forex trading platform.
If the chart price is increasing, it means the exchange rate of that particular currency pair is rising. In the case of EURUSD, this would mean that the EUR is strengthening against the dollar. This is when traders will take ‘long’ positions, and buy euros (simultaneously selling dollars), with the expectation of selling them later at a higher price
If the chart price is decreasing, it means the exchange rate is falling, i.e., the euro is weakening against the dollar. This is when traders will take ‘short’ positions, and sell euros (simultaneoulsy buying dollars), with the hope of ‘buying’ them back later at a lower price.

HOW ARE PROFITS MADE IN FOREX?

Profit in forex is calculated as the difference between the opening and the closing price of the trade. One of the huge advantages of CFD trading is that traders can profit from falling market prices as well as rising market prices.
Profits on buy (long) positions are made when trades are closed at a higher price than when they were opened.
Profits on sell (short) positions are made when orders are closed at a lower price than where they were opened.

READY TO START
TRADING?

The website is operated by a group of companies. 360 Degrees Markets Ltd and ISPASS Technologies Ltd are companies of this group.
ISPASS Technologies Ltd, a software provider, is a registered company in Cyprus, with registration number HE394419 and has its registered address at Nikolaou Nikolaidi 3, Flat/Office 205, Paphos 8010, Cyprus.

360 Degrees Markets Ltd is a registered company in Seychelles, with registration number 8421720-1 and has its registered address at Suite C, Orion Mall, Palm Street, Victoria, Mahe, Seychelles. 360 Degrees Markets Ltd is regulated by the Seychelles Financial Services Authority under the Securities Dealer license number SD019.

All payments through Skrill and Neteller are processed by 360 Degrees Markets Ltd.

AltumFx does not accept residents of certain jurisdictions such as USA, Canada, Iran, North Korea and Russia.

Since AltumFX is not under the supervision of the JFSA or ESMA, it is not involved with any acts considered to be offering financial products and solicitation for financial services to Japan or in the European Union countries and this website is not aimed at residents in Japan or in the European Union countries.

Risk Warning: Trading any kind of financial instrument, including derivatives, carries a high level of risk and may result in the total loss of your investment. You should only trade with money you can afford to lose. Trading derivatives may not be suitable for all investors. By trading with AltumFx, you acknowledge your understanding of this risk warning and your agreement with the Terms and Conditions. AltumFx always recommends you seek independent advice if necessary.