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Forex basics
Knowing the basics of the forex market will give you a solid foundation where you can build your skills, trading strategies and even work towards a successful FX trading career – so let’s dive in!
What is Forex?
The forex market is recognised as the largest and most liquid financial market in the world. The average daily forex transaction is now estimated at around $5.1 trillion, according to the most recent Triennial Central Bank Survey of FX and OTC derivatives markets.
How to trade FX?
Forex trading always involves a currency pair, so when you trade forex you’re effectively exchanging one currency for another. For example, if you trade long EUR/USD, you’re buying the EUR and selling the USD.
When can I trade Forex?
The global FX market is also known as a market that never sleeps. This is because forex markets operate on a 24-hour, 5-day cycle that operates in three major forex centres – i.e. Japan/Asia, UK/Europe and the US (North America). So, wherever you are in the world, you can trade forex almost any time of the day as long as you have access to an online trading platform and a reliable internet connection.
Fx products available for you to trade
While there are hundreds of different trading products to choose from, most traders stick to five main categories:
FX MAJORS
The world’s most commonly traded currencies (EUR/USD, USD/JPY, GBPUSD etc.)
FX CROSSES
Currency trades that don’t involve the US dollar (EUR/CAD, EUR/GBP, GBPJPY etc.)
EXOTICS
Currencies from emerging markets (Thai Baht, Turkish Lira etc.)
COMMODITY BLOCS
A group of currencies closely linked to a commodity (CAD, NZD, AUD)
SAFE HAVENS
Safe Havens: Currencies traditionally known for their stability (JPY, GBP, USD, EUR, CHF)
The costs of forex trading
Trading doesn’t have to cost a lot – with the help of leverage you can trade Forex for as little as US$10. And with our transparent pricing, you’ll always know where you stand.
What is leveraged trading?
Using leverage gives you full exposure to a trade even if you only have a small amount of capital to contribute. For example, applying leverage of 400:1 means you could use $1,000 to control $400,000 worth of trades. Just remember that the higher the leverage, the higher the risk.
Why are spreads important?
In Forex trading the spread determines the price you’ll pay for your trade. Every trade consists of a buy (Bid) price and a sell (Ask) price, with the spread being the difference between the two. In general, the lower the spread the better the price will be.
Are there any other costs?
Most fees and commissions on Axi accounts are either waived or covered by the broker. However, there are a few products that come with extra costs, for example “swap” or “rollover” fees on Futures trades. If you’re unsure, just check with us before you trade.