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What is forex?

The forex or FX market, which is short for the foreign exchange market, is the place in which individuals, companies and governments all trade different currencies with one another. Put simply, the forex market is the marketplace where money is bought and sold.

What is CFD?

Contracts for difference (CFDs) are derivative products which enable you to trade on the price movement of underlying financial assets (such as indices, shares and commodities). A CFD is an agreement to exchange the difference in the value of an asset from the time the contract is opened until the time at which it is closed. With a CFD, you never actually own the asset or instrument you have chosen to trade, but you can still benefit if the market moves in your favour.

Can I trade 24 hours?

Open 24 hours a day and 5 days a week, unlike stock or bond markets, the forex market doesn’t close at the end of each day. Instead, trading just shifts to different financial centres around the world. The day starts with the Sydney session and moves to Tokyo, London, Frankfurt and finally New York before it is time for Sydney to do it all over again!

What is a base currency?

The first currency listed in the pair is known as the base currency and the second currency listed in the pair is what’s known as the quote currency.

What is "bid/ask price"? what is "spread"

In a forex currency quote, the first number is what is called the bid price, or the price at which you are able to buy the currency pair. The second number is called the ask price, and is the price at which you can sell the currency pair. The difference between the bid and ask price is what is known as the spread and is the price that you must pay to enter your trade.

What is a leverage?

Leverage allows traders to gain a large exposure with a relatively small outlay. This has the effect of amplifying profit or loss. A leverage of 1:100 means that in order to open and maintain a position the necessary margin is one hundred times less than the transaction size.

Do you support hedging?

Yes. It is a strategy used to offset market risk, whereby one position protects another.

What is margin?

CFD trading requires investors to deposit a small percentage of the overall cost that would be required if they were to purchase outright the equivalent product in the physical market. Even though the investor’s outlay is small in comparison to the value of the whole position, the investor will still be exposed to the same potential profit and loss. This means that your potential return on investment is magnified, as are your potential losses. Sometimes called 'variation margin'.

How can I make money through Forex trading?

Like trading any other financial instruments, people can make money in forex trading if the currency they buy appreciate in price against the currency they sold.
Trading forex through an FX trading platform provider or broker is usually done on margin. This means that you can open an account and enter an FX trade using a small percentage of your trading capital. The FX broker provides the leverage for traders to trade a bigger amount using a small portion of their money.
The important thing to remember about leverage is that it can magnify profits as well as losses. It is recommended that traders use a low level of leverage particularly if they are only starting out in forex trading.

What is Forex Swap?

Swap is an interest fee that is either paid or charged to you at the end of each trading day. When trading on margin, you receive interest on your long positions, while paying interest on short positions. The net interest difference is known as the carry and traders seeking to profit from this are known as carry traders.

What is slippage?

Slippage occurs when the market is experiencing extreme market fluctuation, this can happen to an open or pending order. During this period of big market change, this transaction phenomenon is the difference between the actual order transaction price and the default price of the transaction. This causes the liquidity to respond slower than the market change, therefore the liquidity cannot keep up with price change. Slippage can be observed during times of black swan event, market crash, change in interest rate, market responds towards events happened during the weekend or major report, meetings, data and figure releases. In the FX market occasional slippage can be observed.

Is there any difference between live account and demo account?

They’re identical in terms of how they work and the prices they show. The only difference lies in that you deposit your own funds in live account to trade. You need to understand the risks involved.

Risk warning:Margin trading for all Forex, Precious Metals and CFD products is associated with significant risks and is therefore not suitable for all investors. Please be sure to fully understand the risks involved before trading with us. For more risk details, please see Rockfort's Risk Statement and Margin Policy.