What is Forex?

Forex, short for foreign exchange, is the global market where currencies are traded. It is the largest and most liquid financial market in the world, with an average daily turnover of 6.6 trillion U.S. dollars as of 2019. The forex market operates on the fluctuations in exchange rates, where traders speculate on the price movements of currency pairs, profiting from the difference between buying and selling prices.

What is Margin?

Margin is the amount of a trader’s funds required to open a new position in the forex market. It is calculated based on the size of the trade, which is measured in lots. A standard lot is 100,000 units of currency. Smaller lot sizes include mini lots (10,000 units), micro lots (1,000 units), and nano lots (100 units). The larger the lot, the greater the margin requirement. Margin allows traders to use leverage, enabling them to place larger trades than their available capital.

What is Leverage?

Leverage allows traders to control larger positions with less capital by borrowing funds from a broker. For example, with 1:100 leverage, a trader with $1,000 in their account can trade with $100,000. While leverage magnifies the potential for gains, it also increases the risk of losses, as the trader is using borrowed funds to trade.

When is the Forex Market Open?

The forex market is open 24 hours a day, five days a week, due to different time zones across the globe. It opens on Sunday at 5 p.m. EST and closes on Friday at 4 p.m. EST, with breaks for holidays. Trading begins in Australasia, followed by Europe and North America. This continuous trading cycle across time zones makes the forex market particularly appealing to global traders.