FinCloudTrace is an expert in helping victims of fraud to recover their funds. Forex trading fraud is one of the areas they often deal with. To learn more about how to recover your funds after being defrauded, contact our experts for a free consultation.

The foreign exchange market is short for the foreign exchange market, which is the market where foreign currencies are traded. In other words, it is a place where one currency is exchanged for another with the aim of making a profit.

The Forex market is one of the busiest trading markets in the world, but understanding how it works can be difficult, especially for relatively new traders. The more you know about how Forex trading works, the better prepared you will be to protect yourself from Forex scams.

What exactly is Forex trading?

The foreign exchange market is extremely volatile, which means that trading is risky, but the rewards are also high. The potential to make a lot of money in a short period of time is what attracts many traders to the market.

Each currency in the Forex market is traded in pairs. For example, the EUR/USD currency pair is the Euro against the US Dollar.

Since the value of different currencies around the world rises and falls throughout the day, there are opportunities to profit by exchanging one currency for another.

What is the difference between day trading and forex trading?

Day trading and forex trading are similar in the sense that the goal of both day traders and forex traders is to generate consistent profits by buying and selling assets throughout the day, rather than purchasing assets and holding them for the long term.

The main difference between day trading and forex trading is what is traded. Day traders can buy and sell a variety of commodities and stocks, while forex market traders can only trade global currencies.

What are the Forex trading hours?

The Forex market is controlled by a global network of banks located in major business centers such as London, New York, Sydney and Tokyo. This means that, unlike certain stock markets, the Forex market never closes during the week - it is open 24/7 from Monday to Friday.

What is Forex Options Trading?

Forex options give traders the right to buy or sell a currency at a specific price on or before a specific date and time, but they are not obligated to do so. The buyer must agree on a price, date and time with the seller and sign an options contract.

What is the money market? How does the money market work?

Money markets have been around since humans began using money to purchase goods and services.

If you have ever travelled and exchanged local currency for foreign currency, you have participated in a simple version of the foreign exchange market, albeit for practical purposes rather than for profit.

In Forex trading, there are three main markets that traders participate in and try to make a profit:

Spot foreign exchange market

The spot forex market gets its name from the word 'spot.' When you trade in the spot forex market, you are exchanging one currency for another at its current value at that time.

Forward foreign exchange market

In the forward foreign exchange market, two parties agree to buy or sell a certain amount of currency at a specified price at a future date, either on a specific date or within a range of dates.

Future foreign exchange market

Transactions in the futures foreign exchange market are similar to transactions in the forward foreign exchange market, where two parties reach an agreement to buy or sell a certain amount of currency at a future date. The main difference is that the futures foreign exchange market uses legally binding contracts.

What are base currency and quote currency?

The base currency in forex trading is the first currency listed and is the currency you buy when you trade. The quote currency is the second currency listed and is the currency you sell. Each global currency is represented by a three-letter code.

Base Currency and Quote Currency Example

In the USD/CAD example, USD stands for the U.S. dollar and is the base. CAD stands for the Canadian dollar and is the quote. If the base/quote pair USD/CAD is trading at $1.28, it means that it costs $1.28 Canadian dollars to buy $1.

What categories do most forex trading providers use?

With so many countries in the world, many of which use their own unique currencies, you can imagine how many unique base and quote currency pairs there are that can be traded in the Forex market.

That being said, there are four main categories of currency pairs that forex traders typically trade through their brokers:

Major currency pairs

There are seven major currency pairs that account for approximately 80% of global Forex trading. All major Forex currency pairs include the U.S. dollar. Examples of major currency pairs are EUR/USD, USD/CAD, AUD/USD, and USD/JPY.

Minor Currency Pairs

Minor currency pairs are traded less frequently than major currency pairs and do not necessarily include the U.S. dollar in all pairs. Examples of minor currency pairs in forex trading include GBP/JPY, EUR/GBP, and EUR/JPY.

Exotic

Exotic forex trades pair a major global currency with a smaller currency. For example, they might pair the U.S. dollar with the currency of a smaller European country that has a currency other than the euro, such as Denmark (DKK) or Norway (NOK).

Regional pairs

Regional Forex pairs are currency pairs of two countries in the same region. For example, Australia (AUD) and New Zealand (NZD) in Oceania or Norway (NOK) and Sweden (SEK) in Scandinavia.

How does Forex trading work? What is the spread in Forex trading?

The spread is the difference between the bid and ask price for any given forex pair. The wider the spread, the more likely you are to make money trading a particular forex pair.

What is a "lot" in Forex?

A lot is simply a batch of standard currency units. The smallest lot can be 100. But the standard lot is 100.000. The larger the lot you trade, the higher the profit.

What is leverage in Forex?

Leverage is when a trader borrows money to trade on a larger scale. Many Forex traders do not have enough funds to buy a standard lot of 100,000 currency units, so they borrow money to trade on a larger scale and hope to make a bigger profit.

What is Margin in Forex?

Margin is a sum of money set aside in a forex trading account to cover financial obligations to the broker in the event that a trade doesn't go well. Different brokers require you to maintain different margin balances in order to trade with them.

What is a pip in Forex?

A pip is a single-digit change in the fourth digit of a currency price on the Forex market. So if the value of USD/CAD increases from $1.28561 to $1.28571, it has increased by one pip.

What is a swap in Forex?

A swap is an agreement between two parties to exchange foreign currencies, usually with the goal of obtaining a loan at a more favorable interest rate than borrowing directly from the foreign market.

What is volatility in Forex?

Swing trading involves entering into Forex trades that last for several days or longer in order to profit from expected price changes in a given currency. Since many Forex trades may only last a few minutes, swing Forex trading is considered medium-term trading, rather than short-term trading.

What is Copying in Forex?

Copy trading in Forex refers to the use of some software to replicate the trades of other traders in real time in the hope of duplicating their success.

What is the Best Forex Trading Platform?

Since the Forex market is not traded in a centralized manner, there is no single best Forex trading platform for beginners to use. However, there are some bad Forex trading brokers that are usually unregulated and run all kinds of scams and different types of fraud.

That's why it's important to make sure you always trade Forex through a broker that is regulated by the country you're trading in. Each country has its own governing body for Forex trading platforms, so do your research, understand the local regulations, and choose a reputable broker accordingly to protect yourself from Forex scams.

How can you protect yourself from Forex trading scams? Check the licenses and regulations of any broker you are considering trading through Be wary of pyramid schemes, which ask you to pay for Forex trading "advice" or "training" and emphasize that you recruit more people into the scheme Do not use Forex trading robots or robot software that claim to help you trade well Be wary of any trading advice or promises that sound too good to be true, i.e. "get rich quick" scams Avoid using Forex brokers that have no contact information or background information Do not trust unsolicited marketing related to Forex trading Before using any Forex trading platform, research it to determine its credibility If you have been scammed by a Forex trading scam, use FinCloudTrace to get your money back

FinCloudTrace is the expert in recovering funds from Forex trading scams. If you find yourself in a trap and have been completely defrauded, it's not over yet. Contact us today to find out how we can help you recover funds from Forex trading scams.