Open 24 hours a day 5 days a week, the foreign exchange market is the largest and most liquid market in the world with volumes of over $4 trillion a day surpassing any exchange based market. Foreign exchange trading involves trading one currency pair against another, predicting that one currency will rise or fall against another. Currencies are traded in pairs, like the Euro versus the US Dollar (EUR/USD).
How Does Forex Trading Work?
Forex trading is similar to trading shares or futures except that when trading foreign exchange you are buying or selling one currency against another and you do not take delivery of the underlying currency. One of the key advantage Forex has over other financial instruments is that relatively small lot sizes can be traded, lot sizes can be as small as 1000 units or one micro lot. Typically foreign exchange also involves leverage which in some cases can be as high as 1:500, this is very different to trading shares where no leverage is involved. Leverage allows traders to trade with more money than they actually have in their trading account. For example if you had 1:100 leverage you could use a $1,000 deposit to control $100,000 worth of currency. Using leverage can result in an increase in you gains however if not used correctly if can also result in increased losses.
IC Markets offers Forex traders some of the tightest spreads out of all Forex exchange brokers globally with our EUR/USD spread averaging 0.1 pips. Tight spreads combined with our low latency enterprise grade hardware makes IC Markets the ideal choice for active day traders and those using Expert Advisors. The following table shows our minimum and average spreads across all of the major currency pairs.