What is Iforex

What is Forex

Trading in Forex—the foreign currency exchange—is sometimes viewed as pure speculation. The potential for profit and, conversely, loss, are on average higher than in other commodities markets. However, as will be explained below, with Forex trading in general, and iForex in particular, thereare means of mitigating potential losses, while maintaining the same opportunity for extremely high profit. The Foreign Exchange is the world’s largest financial market, with over $3 trillion traded daily. By way of comparison, the Forex market is 100 times larger than the New York Stock Exchange, and triple the size of the US Equity and Treasury markets combined. Forex is an over-the-counter market (no central trading arena), meaning that transactions are conducted via telephone or internet by a global, decentralized network of banks, multinational corporations, importers and exporters, brokers and currency traders. This is in contrast to, for example, the NYSE, which is a
centralized equities trading location.
Trading on the Forex Market: Basic Concepts
Forex is the buying of one currency and the selling of another concurrently. Typically, the major
currencies—the British Pound (GSP), the Euro (EUR), the Japanese Yen (JPY), and the Swiss
Franc (CHF)—are traded against the US Dollar (USD). Trade pairs in which the USD is not included are called cross pairs, and occur much less frequently.
The currency pairs are expressed with a base currency as the first part of the pair, followed by the quote currency. (For example, USD/JPY would be the US dollar as the base against the Japanese Yen as the quote.)
Accompanying the currency pair is the quota, or bid/ask price. This is expressed in the following
format: EUR/USD: 1.2836 1.2839. The first number in the series represents the bid price, the cost of selling the Euro against the Dollar, or going ‘short' on the Euro. The second number is the ask price, the cost of buying the Euro against the dollar, or going ‘long’ on the Euro. The difference between the bid/ask price is called the pip spread. A pip is the smallest unit of measure for any currency. In most currencies, this is the fifth digit, or the fourth after the decimal point; in dollars, each pip is equivalent to one-hundredth of a penny. One important exception is the Japanese Yen, in which each pip is the second unit after the decimal point, meaning each pip equals one cent.


Advantages in Trading Forex
High leverage/low margins: Most Forex providers offer traders leverages of 100 to 1. This means that for every $1000, a trader controls $100,000 worth of contracts. iForex offers traders leverages as high as 400:1, the highest level available on the market.
There is a very small amount of equity required as collateral for such a relatively large position. At iForex, there is full margin usage, meaning that a position is automatically closed only when losses equal the total available amount in the account, negating the possibility of a negative account balance. This is an important means of keeping any potential losses within a predetermined, manageable budget. Liquidity: With $2 Trillion traded daily, Forex is the world’s most liquid market. Consequently, buy and sell orders can be filled practically instantaneously.
24-hour trading: The Forex market operates 24 hours a day, from Sunday evening to Friday
afternoon EST. As a result, traders can react to any important information immediately, and are not as vulnerable to after-hour loss of value. No bear market: There is the ability to make the same profit in any market, bullish or bearish. The strength of any particular economy is irrelevant to potential profits. Low transaction costs: There are no hidden fees or commissions in Forex trading. Providers are paid directly from the pip spread. Small study sample: Unlike the stock market in which there are thousands of options to choose from, there are only seven major currencies in Forex, and most successful traders limit their focus to three or four.