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An introduction to forex trading

 

Whether you’re a new or experienced trader, looking to diversify an existing portfolio or hedge against other financial investments to reduce risk, there are many reasons to choose ADSS as your Forex broker

 

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Why trade Forex with ADSS?

 


We give you access to over 60 currencies on the world’s largest and most liquid market.


We are regulated by the Security & Commodities Authority (SCA) and the Financial Conduct Authority (FCA) in the UK.


We have been voted Best Forex Trading Platform, Global Forex Awards 2021


Our bespoke, award-winning MT4 Forex trading platform lets you trade on your desktop, smartphone or tablet.


We have advanced charting and analysis, with over 50 indicators available – and you can also build your own.


Our team is dedicated to Institutional-level customer care.


We have multiple funding and withdrawal currencies.

 

What is forex exchange?

Forex trading is a conversion of one currency to another. This currency exchange process is considered a forex transaction. Based on supply and demand, the exchange rate fluctuates, leaving room for speculation on how the price could change in the future. Most currency conversion transactions are made with the aim of earning profit from the exchange by forex traders – others are done for practical purposes, such as visiting a foreign country. The market is characterised by volatile price movements, which increases both the chance of profits and the risk of losses. Nonetheless, the forex market remains one of the most attractive markets for traders.

Traders buy a currency usually as they believe a country’s economy will do well, grow or in some cases recover in the future. If this happens, it means they could make a profit when they sell the currency back to the market.

The exchange rate of a currency in the forex market may, combined with other external factors, reflect the condition of its country’s economy. So, if you believe that a currency is going to increase in value, you can buy it. While if you believe a currency’s value will decrease, you can sell it back to the market. The market is so large, you can easily find a seller or a buyer when you want to place a transaction.

Flexible forex trading

We can offer you a range of flexible forex trading options, including forex alerts based on price, volume and other market movements to keep you up to date and trade on your chosen currencies when opportunities arise. The forex market is open 24/5 and with our bespoke MT4 trading platform, you can trade anytime, anywhere. The forex (or foreign exchange) market is a decentralised global market for currency trading. As the world’s most liquid market, forex offers exciting investment opportunities – with $5 trillion-worth of trades happening daily.

 

Understanding currency pairs

Forex transactions – the buying and selling of two currencies – always involve a currency pair. For example: buying GBP/USD, indicates that you’re buying British Pounds and selling US Dollars. The base currency is listed first and the quote currency is listed second.


The price of each currency pair is the value of 1 unit of the base currency in the quote currency.


The currencies are listed in three-letter codes; the two first letters symbolise the region while the third refers to the currency name.


 

 

 

 

Currency pairs are classified into these main categories:

 

Major currency pairs

These are the most traded currency pairs in the market, they represent some of the world’s largest economies and are traded in high volumes. What makes these currencies attractive to traders is the fact that they belong to strong and stable economies. Major currency pairs match up the U.S. dollar with each of the other six major currencies – the euro, Japanese yen, British pound, Swiss franc, Canadian dollar, Australian dollar, and New Zealand dollar.

Minor currency pairs

Minor currency pairs, also known as cross currency pairs, are pairs that do not include the U.S. dollar, but do include at least one of the world’s other three major currencies. That is to say that the Japanese yen, British pound or the euro are at least one, if not both of the currencies included in the pair.

Exotic currency pairs

Exotic pairs are formed when a major currency is paired against a currency of an emerging or a small economy. These are riskier to trade – they are characterised by lower liquidity, higher volatility, and wider spreads than major pairs, which makes them more vulnerable to sudden shifts in cases of financial and political changes.

 

Know your currency pairs – and their nicknames.

 

 

 

 

Types of Forex Markets and Working Hours

The forex market is decentralised and governed by a global network of banks in four primary trading centres in different time zones: New York, Tokyo, London and Sydney. It is open globally – five days a week, 24-hours a day – beginning with the financial institutions in New Zealand and continuing throughout the day as institutions open across Asia, Europe and the Americas. The trading hours are so flexible, you can trade any time of the day in these forex markets:


Spot forex market: A foreign exchange spot transaction, also known as FX spot, is an agreement between two parties to buy one currency against selling another currency at an agreed price for settlement on the spot date. The exchange rate at which the transaction is done is called the spot exchange rate


Future forex market: A futures contract is a buying or selling contract which has standardized terms and is traded on an exchange, where prices are settled on a daily basis until the end of the contract.


Forward forex market: A forward forex contract is a private and customizable agreement that settles at the end of the agreement and is traded over the counter. 


 

Top five forex phrases you need to know

Position: It stands for trades in progress. A long position means buying a currency while expecting its value to increase. A short position means selling a currency while expecting it to decrease in value. The position is considered closed when the trade is complete.


Leverage or Margin: When opening a forex trade, a small proportion of the total exposure [YH2] is required. The amount of margin depends on the margin rate requirements. This differs between each trading instrument, depending on market volatility and liquidity in the underlying market.


Pip: This is an acronym for ‘percentage in point’. This is a very small percentage of a unit of currency’s value. Most currency pairs are priced out to four decimal places, and the pip change is the last (fourth) decimal point. Pips help assess the variation in the currency pairs or exchange rate.


Spread: A spread is the price difference between the price of buying and selling an underlying asset.


Lot: Since currencies in the forex market move in very small amounts, a lot is required to standardise trades. A 100,000 unit of a currency is the standard size for a lot

 

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How to trade forex

 

Understanding the market and world economy

The goal of trading forex is to exchange a currency for another one, anticipating that the price will change and that the currency you have bought or sold will increase or decrease in value. Market movements are mostly the outcome of the news, political events and central bank announcements.

It is imperative to analyse the market thoroughly to be able to make informed trading decisions. Even if you believe in luck or your gut feeling, you still need to conduct proper research. Making regular checks of current and historical trading charts in order to monitor a currency’s movement can help give an indication of the political climate in a country and help you assess the impact of other economic indicators. These factors affect supply and demand for currencies, creating daily volatility in the forex market. With practise, and by making sure you are up to date with the latest news from around the world, you may be able to learn how to predict the movement of the global economy, which could help your trading strategy. Trading platforms can help you formulate advanced technical analysis and trading strategies.

Choose a forex trading strategy

When you start trading, you need to develop a general strategy that can help you in different situations. You can also choose different strategies for different currency pairs or market conditions. To be able to devise a strategy that works for you, first you need to evaluate your risk profile. Start by gaining a solid understanding of the market aspects and assessing your capital. Also, set realistic expectations for the profits you’re anticipating and do extensive research on the currency pairs that you’re interested in, bearing in mind the risks involved.

Your strategy may help you define your approach and reach your trading goals. Diversifying your investment profile can also help you minimise loss and enhance your strategy in the long term. Through extensive testing and practise, you will be able to refine your strategy in harmony with your risk profile.

Select a currency pair – start trading.

Many beginners like to start with major currency pairs; however, you can choose from minors or exotics too. Before you choose your position, you need to know how to read a forex quote – let’s recap.

In the example below, the base currency is EUR, and the quote currency is USD. The difference between both rates is the spread. When you buy EUR/USD, you’re buying EUR (base) and selling USD (quote) because you believe that EUR will increase in value in relation to the USD. In the opposite scenario, you’re selling because you’re anticipating the base currency to decrease in value.

 

 

 

 

Stop losses, limit and other forex orders

Since the forex market can be very volatile, you may choose to use stop losses and limit orders to help to protect you – they allow you to automatically exit trades at a predefined level. Many trading strategies include a stop-loss order, which sets a target closing price for the trade. This order aims to close a position at a pre-set level and is designed to cap or control potential losses.  In some instances however, a stop-loss order may not be executed at the exact level set if the market ‘gaps through’ and will typically be executed at the next closest price.

 

Types of stop orders include:


Normal stops are when you close the position when the market moves against you – these don’t protect against slippage.


Trailing stops – some brokers offer trailing stops which effectively ‘trail’ a position by a set number of points/pips


As well as using orders to help miminise risk, traders can also use limit orders to lock in a potential profit if the market hits a specified level.  There are two types of limit orders:


A limit order to buy at a price below the current market price – this will be executed when the price hits an equal or less value than the price you set.


A limit order to sell at a certain price higher than the current market price – this will be executed when the price hits a level equal to or more than the price you predefined.


Another frequently used forex order is the take profit order, which allows you to close the trade position automatically when the price reaches a certain level.

 

Time to start forex trading

Get hands-on experience with ADSS. Trade with our MT4 platform and benefit from personalised customer service, a wide range of educational tools and expert analytics.

Professional forex trading

 

The following list represents the live forex prices of the ‘majors’ and other popularly traded currency pairs. These prices are arranged according to account type, giving you some idea of just how much you could save when trading with ADSS. You will also have access to a wealth of charting capabilities via our bespoke version of the industry-leading platform MT4 and be able to perform lightning-fast trades based on sound technical analysis and a variety of indicators.

 

Our bespoke MT4 platform offers:


Tools for creating custom indicators


Programmed trading strategies


Automated trading, including alarms and messages


Expert advisors


A large number of community-sourced indicators


Advanced analysis and charting tools


Newsfeeds to keep you up to date with the FX world


Fast execution

Pricing from Trading View is indicative and does not represent ADSS pricing.

Example 1
Buy 10 lots of EURUSD @ 1.1600
Exposure = 10*100,000*1.1600 = $1,160,000
Margin requirement = $1,160,000 ÷ 500 = $2,320

Example 2
Sell 5 lots of USDJPY @ 112.00
Exposure = 5*100,000 = $500,000
Margin requirement = $500,000 ÷ 500 = $1,000

Example 3
Buy 1 lot of GBPJPY @ 150.673 {GBPUSD = 1.3465 and USDJPY = 111.90}
Exposure = 1*100,000*1.3465 = $134,650
Margin requirement = $134,650 ÷ 500 = $269.30

The amount of leverage available to you can vary and will depend on your trading positions. The more volume you trade, the more the leverage on offer will decrease. To know more, please download the dynamic margin sheet available on this link.


Site by Pink Green
© ADSS 2022


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 LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.

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.