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Forex, abbreviated from foreign exchange, is the process that involves converting one currency to another. It can also be referred to as currency exchange or FX. Forex trading occurs on the forex market, the world’s largest financial market as well as the most liquid, with trillions of dollars being traded every day. Some of this activity involves traders speculating on a currency’s market price with the intention of making a profit from price fluctuations in the market.
The forex market is an electronic marketplace where currencies are traded. One thing that makes the forex market unique compared to other markets is that there is no central exchange. Forex trading is done on a decentralised market, meaning all transactions occur over computer networks that are connected to traders around the world.
The forex market is open 24 hours a day, five days a week, and it is closed on the weekend to retail traders. There are four major sessions in the market: Sydney, Tokyo, London, and New York. Sessions overlap, and traders may participate in any session regardless of their location. This makes the market extremely active, with prices fluctuating constantly.
When you trade forex, you are exchanging one currency for another. Therefore, forex is always traded in pairs. In each currency pair, the currency on the left is called the base currency, while the one on the right is called the quote currency. The currency pair’s exchange rate represents how much of the quote currency is needed to buy one unit of the base currency.
Forex is predominantly traded via three markets. They are the spot market, the forward market, and the futures market.
Spot market: This is the largest and primary forex market to trade in. Currencies are bought and sold based on the current market price, or ‘on the spot’. The price is primarily determined by supply and demand, as well as other factors such as national interest rates and economic performance.
Forward market: This is where private agreements are made between two parties to buy a certain currency at a future date with a predetermined price, instead of executing a trade on the spot. The terms of the contract are determined between the two parties themselves.
Futures market: This is where standardised agreements are made between two parties to exchange a currency at a future date and at a predetermined price. Futures contracts are traded on exchanges.
ADSS offers a range of global markets for traders, with CFD opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.
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Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.
ADS Securities L.L.C – S.P.C (“ADSS”), a limited liability company – sole proprietorship company incorporated under United Arab Emirates law. Registered under Commercial License No.1190047. ADS Securities L.L.C S.P.C is regulated and authorised in the UAE by the Capital Market Authority (CMA) under Category 1 License No.305027 (Trading Broker, Trading and Clearing Broker, Trading Broker in the International Markets, Trading Broker of OTC Derivatives and Currencies in the Spot Market, Financial Products Dealer) and Category 5 License No.20200000217 (Introduction). Registered Office: 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.
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ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.
