For high volume traders, FOREX.com offers an Active Trader program with five tiers of pricing. Level one starts with typical spreads of 1.2 pips on the EUR/USD for traders who have a balance of least $25,000. Spreads are further reduced with each subsequent level as traders surpass specific month-to-date (MTD) trading volume thresholds. For example, level five brings spreads as low as 0.84 pips on a pair for traders who reach higher than $500 million in MTD volume.
Risk Warning: Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before trading, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the FXTM brand based on the legal requirements in his/her country of residence. Please read FXTM’s full Risk Disclosure.
U.S. President, Richard Nixon is credited with ending the Bretton Woods Accord and fixed rates of exchange, eventually resulting in a free-floating currency system. After the Accord ended in 1971, the Smithsonian Agreement allowed rates to fluctuate by up to ±2%. In 1961–62, the volume of foreign operations by the U.S. Federal Reserve was relatively low. Those involved in controlling exchange rates found the boundaries of the Agreement were not realistic and so ceased this[clarification needed] in March 1973, when sometime afterward[clarification needed] none of the major currencies were maintained with a capacity for conversion to gold[clarification needed], organizations relied instead on reserves of currency. From 1970 to 1973, the volume of trading in the market increased three-fold. At some time (according to Gandolfo during February–March 1973) some of the markets were "split", and a two-tier currency market[clarification needed] was subsequently introduced, with dual currency rates. This was abolished in March 1974.
Some time later, the EUR/USD exchange SELL rate (the rate at which you can sell euros for US dollars) is 1.5500. You sell your €1 000 and get $1 550. Having started with $1 450, you now have $1 550 – you’ve made a profit of $100. Alternatively, the EUR/USD exchange SELL rate could be 1.3500. If you sell your €1 000, you’ll get $1 350. Having started with $1 450, you now have $1 350 – you’ve made a loss of $100.
If your FOREX broker offers you a leverage of 1:100 you can trade with a 100 times more money than you have in your deposit. This means that if you want to buy 100 000 EUR/USD you only need to have a 1 000 actual euros. With this kind of leverage you can take a position that is a 100 times larger in value and expect a 100 times bigger profits or losses, therefore great care is advisable when placing your trade. Equities, on the other hand, are traded without leverage.
USDJPY is approaching its resistance at 112.16 (61.8% Fibonacci extension, 78.6% Fibonacci retracement, horizontal pullback resistance) where it is could reverse down to its support at 111.38 (50% Fibonacci retracement, horizontal pullback support). Stochastic (89, 5, 3) is approaching its resistance at 96% where a corresponding reversal is expected.
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Just like stocks, you can trade currency based on what you think its value is (or where it's headed). But the big difference with forex is that you can trade up or down just as easily. If you think a currency will increase in value, you can buy it. If you think it will decrease, you can sell it. With a market this large, finding a buyer when you're selling and a seller when you're buying is much easier than in in other markets. Maybe you hear on the news that China is devaluing its currency to draw more foreign business into its country. If you think that trend will continue, you could make a forex trade by selling the Chinese currency against another currency, say, the US dollar. The more the Chinese currency devalues against the US dollar, the higher your profits. If the Chinese currency increases in value while you have your sell position open, then your losses increase and you want to get out of the trade.