What is Forex?

One of the questions we get asked all the time is “What is forex trading?” When did it start? How big is it? Who are the major players? What makes currency rates change? Here are the answers to all your questions!

About forex

Forex is the international market for the free trade of currencies. Traders place orders to buy one currency with another currency. For example, a trader may want to buy Euros with US dollars, and will use the forex market to do this. The forex market is the world’s largest financial market. Over $4 trillion dollars worth of currency are traded each day. The amount of money traded in a week is bigger than the entire annual GDP of the United States! The main currency used for forex trading is the US dollar.

When did forex start?

As the world continued to tear itself apart in the Second World War, there was an urgent need for financial stability. International negotiators from 29 countries met in Bretton Woods and agreed to a new economic system where, amongst other things, exchange rates would be fixed. The International Monetary Fund (IMF) was established under the Bretton Woods agreement, and started to operate in 1949. All exchange rates changes above 1% had to be approved by the IMF, which had the effect of freezing these rates. By the late 1960’s the fixed exchange rate system started to break down, due to a number of international political and economic factors. Finally, in 1971, President Nixon stopped the US dollar being converted directly to gold, as part of a set of measures designed to stem the collapse of the US economy. This was known as the Nixon shock, and lead to floating rate currency markets being established in early 1973. By 1976, all major currencies had floating exchange rates. With floating rates, currencies could be traded freely, and the price changed based on market forces. The modern forex market was born.

Who trades on the forex market?

There are many different players in the forex market. Some trade to make profits, others trade to hedge their risks and others simply need foreign currency to pay for goods and services. The participants include the following:
• Government central banks 
• Commercial banks
• Investment banks 
• Brokers and dealers 
• Pension funds
• Insurance companies
• International corporations 
• Individuals

When is the forex market open?

Unlike stock exchanges, which have limited opening hours, the forex market is open 24 hours a day, five days a week. Banks need to buy and sell currency around the clock, and the forex market has to be open for them to do this. What factors influence currency exchange rates? As with any market, the forex market is driven by supply and demand:
• If buyers exceed sellers, prices go up
• If sellers outnumber buyers, prices go down

The following factors can influence exchange rates:
• National economic performance
• Central bank policy
• Interest rates
• Trade balances – imports and exports
• Political factors – such as elections and policy changes
• Market sentiment – expectations and rumours
• Unforeseen events – terrorism and natural disasters
Despite all these factors, the global forex market is more stable than stock markets; exchange rates change slowly and by small amounts.

What are the advantages of the forex market?

The forex market has many advantages. These include the following:
• It’s already the world’s largest market and it’s still growing quickly
• It makes extensive use of information technology – making it available to everyone
• Traders can profit from both strong and weak economies
• Trader can place very short-term orders – which are prohibited in some other markets
• The market is not regulated
• Brokerage commissions are very low or non-existent
• The market is open 24 hours a day during weekdays

Before You Really Start Trading in Forex Market,You need to Choose a Best Forex Broker.


Benefits of Forex Signals

Why should I use Signal Trader?

Signal Trader lets you automate trading in your brokerage account, based on signals from proprietary traders, allowing you to tap into their trading expertise and gain a key understanding of their techniques.

Signal Trader’s innovative auto-execution mirroring system allows you to duplicate the trades of your favorite prop traders by automatically executing orders in your trading account, based on their signals, without any further intervention by you.

You can control your desired level of risk with money management options that allow you to define trading parameters, including trade size, as well as monitoring trades, positions and profit and loss, all in real time.

By using Signal Traders auto-execution mirroring system you can build up your portfolio based on the trading activity of the prop traders you wish to follow.

Signal Trader also provides clients with signal alerts based on the trading activity of prop traders, via email or on the charts displayed on each live trading room.

All the accounts displayed in Signal Trader’s live trading rooms are the real accounts of prop traders, trading with real money and as trades are executed they are displayed in real time.

What is Forex Signal?

What is Forex Signal?

A Forex signal is a suggestion for entering a trade on a currency pair, usually at a specific price and time.[1] The signal is generated either by a human analyst or an automated Forex robot supplied to a subscriber of the forex signal service. Due to the timely nature of signals, they are usually communicated via email, website,SMS, RSS, tweet or other relatively immediate method.

Types of services

Services provided fall into four categories:

  1. Unpaid/free signals
  2. Paid signals from one provider whether by personal analysis or algorithmic analysis
  3. Paid signals aggregated from multiple signal sources or ‘systems’
  4. Signals supplied by trading software located on the trader’s computer, also known as a forex robot or EA (expert advisor)

Typical features offered by Forex signal service providers

The main services offered by forex signal suppliers are:

  • Exact or approximate entry, exit and stop loss figures for trades on one or more currency pairs
  • Supporting graphs and/or analysis for the signals
  • A trading history showing the number of pips profit/loss per month and/or the risk/reward ratio and actual trades. Sometimes (especially in the case of forex robots) this may be shown as back-tested results
  • One-on-one coaching, or additional interaction with the signal provider such as comments, forum, etc.
  • Account management whereby a subscriber’s account can be traded by the signal provider
  • Educational resources either via the internet or phone
  • A trial period for a lesser price

Although these are the main features of a signal supplier, not all of them offer the complete list of services.

Scams and fraudulent activity

As forex is popularly touted as a get-rich-quick method there are a number of services that supply signals of debatable quality, which do not answer the users’ expectations for profits.

Methodologies and trading strategies

The majority of signal providers focus on supplying signals based on technical analysis and a minority work on fundamental analysis or price action. Technical analysis, such as ichimoku and candlestick charting, show both short and long term price trends giving the signal provider flexibility in supplying a range of trade options. Fundamental analysis gives longer term trade ideas. Price action gives extremely short term trade ideas, often more suited to scalping.