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All about Forex

Forex trading is known to most investors from their holiday travels. But did you know that the foreign exchange market is many times bigger than the stock market? $ 4 trillion change hands every day around the world. In forex trading, investors rely on changes in exchange rates. How Forex trading works and how to become a Forex trader at FXFlat, your CFD and Forex broker, is explained on this page.

Opportunities and risks in forex trading

The foreign exchange market - also known as foreign exchange market, forex or "FX" - is a lever trade. This means that even small amounts of money can be moved. For each trade, only a security deposit, the so-called margin is deposited. If, for example, a 50: 1 lever is used, positions with a value of € 50,000 can be moved with a margin of € 1,000. Trader benefit fully from the price development, even if only a small amount is actually invested.

It should be noted, however, that the leverage can be knocked out in both directions. Thus, on the one hand disproportionately high profits and on the other very high losses possible. Therefore Forex trading is especially suitable for people who already have some trading experience. Comprehensive basic knowledge is essential for successful currency pair trading.


How to start in forex trading?

In the beginning there are the basics. These include, among other things, learning the most important technical terms. Subsequently, the learned can be implemented with the free demo account at FXFlat in practice. Here, beginners without risk can make the first trades and track the development of the courses. In addition, the demo account can be used to test and compare FXFlat's trading platforms with extensions such as the StereoTrader.


Beginners should be aware from the start that foreign exchange is a highly speculative financial instrument. Only those who are aware of the risks can successfully trade in the long term. Therefore: Do not be put off by initial failures, these are part of it and are completely normal. In addition, if you have any questions, please contact the experienced account managers at FXFlat in order to use your experience from the demo account later in the live account.


Which currency pairs are tradable on FXFlat?

The bulk of currency trading takes place in the key currencies US Dollar, Euro, Yen, Pound and Swiss Franc. These currencies are called the "majors". Other currencies are called minor values. They buy or sell a reserve currency, such as the US dollar, against the currency of another country. Example: US Dollar vs. South African Rand (USD / ZAR).
Depending on the security type, FXFlat offers you more than 50 currency pairs in forex CFD trading and 6 currency pairs in the forex spot.


Example of Trading Forex CFDs in Practice

Suppose you think that the EUR / USD exchange rate will rise in the next few days and buy a CFD at a price of 1.0700. The CFD in this example equals 10,000 units in the base currency. Furthermore, we assume that the margin is one percent and you therefore have to deposit at the opening of the position a security deposit of 100 euros (0.01 x 10,000).

The euro is gaining against the dollar as expected and closing the position at 1.0750. There will be a difference of 0.0050 (1.0750-1.0700) between the opening price and the closing price of the position. The profit (and loss) is calculated on the basis of the exchange rate. In our case, you have made a profit of 50 dollars (0.0050 x 10.000). Once the profit has been realized, the position is converted into euros, which corresponds to an amount of approximately 46.51 euros. The value date (value date) is immediate.


Differences between Forex CFD and Forex Spot Trading

At FXFlat, you are in the comfortable position of trading currency either with classic forex CFDs or as a forex spot in the direct forex spot. In the following, we would like to show you the most important differences and features.

Forex CFDs are derivatives issued by an issuer with a fixed reference to a specific reference market.
By contrast, Forex Spot is the reference market itself and a cash transaction, ie the cash register. The forex spot price of a currency pair is determined by all market participants and not just by a single market maker or issuer as in CFDs.

Differences at a glance

Forex SpotForex CFD
Margin %0.503.33-20.00
Spreadfrom 1.2from 0.6
Trading times00:00 a.m. - 10:00 p.m. CET24h
Delivery--
PricingMultilateralBilateral
Negative Balance ProtectionYesYes

Important Terms in Forex Trading

Show all
  • Spread
  • Margin
  • Pip
  • Lot
  • Leverage
  • Margin call / margin requirement
  • Liquidity
  • GAP
  • Slippage
  • Swap

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