FOREX TRADING

Frequently Asked Questions

• 1. What is a forex broker and what services do they offer?

  A forex brokerage is a company that provides traders with access to trading platforms. Using that platform, investors can trade currency pairs, benefiting from the changes in prices.

  2. What is a zero spread forex broker?

  In order for traders to achieve maximum potential returns, they need to search for forex brokers that provide lower spreads. Spread is the difference between the ask price and buy price. Based on that, zero-spread forex brokers can be the optimal option for investors, especially if they are dealing with some of the highest leverage brokers.

• 3. Are there any hidden fees or commissions with zero spread forex brokers?

  In fact, low spread forex brokers or zero spread forex brokerage cannot guarantee a zero-spread all the time. Given that the prices of the currency pairs are changing, the spread is going to change as well. Additionally, some brokers might ask for higher commissions on operations, and charge fees on withdrawals or inactivity of the trading account. STARTRADER, for example, charges 0 commissions, and 0 deposit fees on most channels.

  4. How can I verify the legitimacy and regulatory status of a forex brokerage?

  To have peace of mind and ensure that you are trading with a trusted broker, visit their website and check their regulatory status. In case the broker has licenses from reputable authorities, you can have confidence in them. STARTRADER holds licenses from the following:

  • Financial Conduct Authority (FCA) in the UK
  • Australian Securities and Investments Commission (ASIC)
  • Financial Sector Conduct Authority (FSCA) in South Africa
  • Financial Services Authority (FSA) in Seychelles

• 5. What is forex currency trading and how does it work?

  In forex currency trading, traders aim to profit from the continuous changes in price of the currency pairs. By selling and buying currencies on the foreign exchange market, they hope to generate returns.
  The forex exchange market is one of the most liquid and volatile markets, operating 24/5. As such, it holds a lot of opportunities.

  Currency pairs are traded in lots. A "lot" is a standardized unit that measures the amount of currency being traded.

  • A standard lot is 100,000 units
  • A mini lot is 10,000 units
  • A Micro is 1,000 units

  With leverage, investors can trade a larger amount with a smaller investment.

  6. Which online platforms are considered the best for currency forex trading?

  When it comes to online currency forex trading, MT4 and MT5 emerge as the best platforms. They offer a wide range of features and tools. These two popular platforms have advanced charting tools, and customizable indicators. With the expert advisors features, they support traders to fully automate their trades.

• 7. What are the trading hours for the forex market?

  The forex market operates 24/5. It only closes on weekends, as this market operates in various time zones around the world. Once it closes in one country, it opens in another. Here is a general overview of the trading hours for the forex market around the world.

  They key trading hours for the forex market

  • New York: 8 a.m. to 5 p.m. (EST)
  • Tokyo: 7 p.m. to 4 a.m. (EST)
  • Sydney: 3 p.m. to 12 a.m. (EST)
  • London: 3 a.m. to 11 a.m. (EST)

  8. What factors contribute to the high market cap of the forex market per day?

  While it cannot be easily specified on daily basis, several factors have significant effect on the market cap of forex per day, including:

  • Macroeconomic statistics, such as inflation,
  • Stock, bond, commodity, and other capital markets
  • International trade numbers, including trade deficits and surpluses,
  • Political news, particularly when unexpected outcomes occur

  Combined together the aforementioned factors can hugely influence forex market trading.

• 9. What are the best practices for trading in the forex market?

  When trading in the forex market, it is advisable for investors to follow those practices:

  • Investors should start by setting their financial goals, so they have a clearer idea of the roadmap to follow.
  • It is important to carefully choose a reliable broker with a good reputation, lower commissions and excellent support.
  • Because the forex currency market is volatile, it is important for investors to be consistent with your methodology.
  • Risk and reward ratio is an important tool that helps investors to evaluate the reward they can possibly earn for each dollar they risk.
  • Stop-loss order is like a safety net that protects investors from big losses. It is more like an instruction that investors give to brokers to sell a certain asset when the price level reaches a certain point.

  10. How can I get started with online forex trading?

  To start online forex trading, it is best to first build a foundation about this market. Having a good idea about the market and how it performs will help investors identify the risks and opportunities it presents.

  Once investors have built a solid foundation of the forex market, they need to do a thorough research about brokers they can do business with. While researching, it is important to look at the different offerings of each. A broker with excellent customer support will address any concerns immediately. A broker with good regulations means that investors will face no issues withdrawing money, and of course fast execution and tight spreads can help investors maximize their potential returns.

  After investors choose a trusted broker, they can move on to opening their account. They should start with a demo account to hone their skills and practice their strategy, then transfer to a live forex online trading account.

  To be successful as traders, investors should analyze their preferred assets to spot the best opportunities in the market and identify their exit and entry points.

• 11. What are the advantages and disadvantages of trading forex online?

  Let us start with the advantages:

  • Because the forex market is operating 24 hours per day, both short-term and long-term investors can find it rewarding.
  • The forex market is one of the most liquid markets around the world. Even large orders will not affect the price much, as they are efficiently and easily filled up.
  • Different online forex trading platforms offer different spreads. Some brokers provide tighter spreads. As a result, the initial capital required is low. Moreover, investors benefit from the high leverage when venturing in forex online trading, which means they need to invest less.
  • Yet, there are some disadvantages, the most important of which are:
    
    1. High risk
    It has been already mentioned that investors can trade the currency pairs with a high leverage. A high leverage does not only bring higher potential returns but also higher risks!
    
    2. High volatility
    Because the price of the currency pairs in the online forex exchanges are mainly affected by macroeconomic and geographical developments, this market can become very highly volatile in times of uncertainty.

  12. What are the best forex pairs to trade?

  Investors venturing into the forex market might wonder: what are the best forex pairs to trade? While the answer depends largely on each investor’s strategy, here is a forex pairs list that shows the popularly traded currencies, starting with the most traded one.

  • EUR/USD (euro/US dollar)
  • USD/JPY (US dollar/Japanese yen)
  • GBP/USD (British pound/US dollar)
  • AUD/USD (Australian dollar/US dollar)
  • USD/CAD (US dollar/Canadian dollar)
  • USD/CNY (US dollar/Chinese renminbi)
  • USD/CHF (US dollar/Swiss franc)
  • USD/HKD (US dollar/Hong Kong dollar)

• 13. What are the major forex pairs in the forex market?

  Here are the key currency pairs to focus on in forex currency trading

  The US dollar is the main currency when it comes to trading in the forex market. In fact, more than 50% of the trades in this market involve this currency.
  As far as major pairs are concerned, the EUR/USD is the most traded globally. However, traders add other pairs for their portfolio to make it more diversified, and thus less prone to risks.

  As for the other popularly traded currencies, we can classify them in categories.

  • The EUR/USD is the most traded one among forex major pairs.
  • The EUR/JPY is the most traded among the minor pairs.
  • As for the exotic pairs, the USD/HKD is the most popular among traders.

  14. How do major forex pairs compare in terms of liquidity and volatility?

  In general, major forex currency pairs are highly liquid and less volatile than minor or exotic pairs. Let us delve into some more details:

  • Major pairs, especially EUR/USD, USD/JPY, and GBP/USD, are considered to be high volume forex pairs in trading. In contrast, minor and exotic pairs have lower trading volumes, leading to wider spreads and potentially more difficulty entering and exiting trades quickly at the desired price.
  • In terms of volatility, major forex currency pairs tend to be less volatile due to the stability of the underlying economies they represent. In contrast, minor and exotic are highly volatile forex pairs due to factors like smaller economies, political instability, or dependence on commodities.

• 15. What are the basic steps to start trading in forex?

  To learn how to trade in the forex market, it is first important to develop a good knowledge basis. Investors should know about the updates and news that affect this market in order to be able to react in the right way and make informed decisions.

  Once they assess their risk and return ratio, then can move to building their strategy and practicing it on a demo account.

  After that they can choose their favorite pairs to trade and place their first orders. Of course, they should also utilize risk management tools such as stop loss and trailing stop loss.

  16. What are the common mistakes that new forex traders should avoid?

  Forex traders should avoid the following mistakes when venturing into this type of trading:

  1. Not keeping up to date with the market
  The forex market is always on the move 24 hours! As such, there is often something that is moving the market and affecting the prices there. When trading in the forex market, investors should be aware of the events that can affect their trades, and predict how these events could move the market. To do so, they need to pay close attention to the economic indicators and see how they compare to fundamental analysis.

  2. Not understanding how leverage works
  New joiners of the forex trading world find it exciting to take larger positions with less money using leverage.They forget that leverage does not only increase their potential returns, but also potential losses.

  3. Not setting a stop loss
  A stop loss is similar to a safety net that can help you reduce losses. When you set a stop loss you specify the point at which you want to exit a trade. As such, it helps you to set your exit strategy before you are in the trade and emotions are running high.

  4. Not practicing with a demo account
  Risk is inescapable in trading. Therefore, it is advisable not to start your trading journey with real money. Instead, open a demo account to try your plan and understand the ins and outs of the trading platform you are using.

  5. Allowing emotions to take control of them
  With the prices changing over the course of 24 hours per day, it is very hard not to allow your fear and greed to take control over you. For that reason, it is very important to not only set a plan but also stick to it.

• 17. How can I continue to improve and learn as a forex trader?

  1. Keep educating yourself about the market
  Knowledge is your power in the trading world. Keep educating yourself and learning about the market.

  2. Keep a trading journal to track your progress
  Keeping a journal can help you understand what parts of your strategy you need to work on improving. Additionally, it shows you what worked for you, and what did not, which is important to you to enhance your trading skills.

  3. Always have a plan
  Not having a plan means that you do not know your destination. Study the market, and your stance. Define the risks you are willing to take, and set clear financial goals.

  4. Stick to your strategy
  To control emotions, and mitigate potential risks, always stick to your strategy and try no to deviate as a reaction to your win or loss.

  5. Invest only with money that you can afford to lose
  Investment is risky. In addition to practicing your skills with a demo account, be sure to only risk money that you are willing to lose.

  6. Take your time and be patient
  It takes time to understand how trading works and set a strategy according to that. Be patient with yourself and give yourself time.

  18. What are the opening and closing times of the forex market?

  As we have mentioned before, the forex market is operating 24 hours, 5 days a week. Accordingly, the forex market opening time in the world in general is Monday, which is the first day of the week. Nevertheless, the timing differs from one area to another due to different time zones. For example, the forex market’s time in India is different from that of Japan, as each falls in a different time zone. To clarify, the forex market opening time on Monday is 9 a.m. but 9 in India will be 12:30 p.m in Japan.