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What Is Forex Trading?
Forex (also known as currency futures, foreign exchange, or FX futures) trading is the act of using exchange-traded futures contracts to buy or sell a specified amount of a particular currency at a set price at a future date.
Despite the complications that can involve forex trading, most people have some experience with it through currency conversion.
For example, a tourist traveling from Singapore to France will not be able to purchase goods from France in SGD. Instead, an exchange will convert the local currency into EUR based on the current exchange rate.
Similarly, the mechanics of this currency exchange can also be applied to forex trading though the contract terms may differ.
To allow traders to access the forex market, Orient Futures is a regulated forex broker* that provides trading platforms and brokerage services.
*(Forex and CFDs are complex instruments, trading with a regulated forex broker is important for the safety of a trader’s funds, learn about the 5 benefits of trading with Orient Futures as a MAS-regulated firm here.)
Forex Terms/ Forex Explained
There are a few key terms in forex.
- A “pip” is a unit of measurement used to express the change in value between two currencies. Each pip is 0.0001 but it may also be 0.01 depending on the currency that is paired. This can be further broken down into pipettes, which are measured as a “tenth of a pip”.
- The currency that is bought is termed a “base currency”, while the currency that is sold is termed a “quote currency”.
- When trading, traders can refer to the foreign exchange volatility, which refers to the price fluctuations of the market. This is used as an indicator of how risky a currency pair is to trade.
Why Trade In Forex?
There are 4 main reasons why forex trading can be a good place to start, but the benefits are subjected to changes and market conditions.
Firstly, trading in forex offers a chance for multi-strategy approaches, these include a combination of profit-making, hedging forex, leveraging, and speculation. For example, it can be used to hedge against international currency and interest rate risk caused by inflation.
Secondly, among the many trading opportunities such as futures or crypto, forex occupies the largest proportion of trade. Based on the 2019 Triennial Central Bank Survey, trading in forex accounted for up to $6.6 trillion per day in April 2019. It is by far one of the largest financial markets in the world.
Thirdly, the forex market allows for the diversification of investment portfolios. As the market is always readily open 24 hours, traders can be flexible or react to changes faster than other forms of trading methods.
Lastly, there are many forex pairs in the forex market, so it is possible to compare among countries to determine the best combination.
Types Of Forex Market
There are three main types of forex markets, spot market, forwards, and futures market.
- The first type is trading is in the spot market. This form of trade is where the underlying currencies are physically exchanged “on the spot”. These are usually done at the current market rate, known as the “spot price”.
- The second is forex trading in the forward’s market. This form of trading is also called FX NDF (Non-Deliverable Forwards). It is an agreement between two parties to buy a currency at a future date and at a predetermined price in the OTC market.
- The last type of trading is in the FX futures market. This is where traders use a standard contract on a dedicated exchange to buy or sell on a future date.
How To Trade In The Forex Market
With the development of technology, FX invest, or forex trading can be done through a variety of online platforms. This is subjected to the currency pairs offered by the broker.
Orient Futures Singapore offers the currency pairs shown in the diagram above.
We also enable traders to access FX NDFs when they operate in countries that have non-deliverable currencies (e.g., CNY, TWD, INR, KRW, BRL, IDR, PHP, SGD,CNH and recently added ILS). Or G1O currencies such as AUD, CAD, EUR, JPY, NZD, NOK, GBP, SEK, CHF, USD.
To trade these pairs or check currency prices, clients and forex traders are able to access Flextrade, Metatrader 5, and Stellar as the main platforms for forex trading, UK forex trading clients or other institutional investors abroad can also open a live account or a demo account to begin trading with us.
What Time Does The Forex Market Open?
The forex market is open globally over a 24-hour period due to time zone differences among countries. It is only within the country that the forex market closes and opens. For example, if you search for “When does the UK forex market open”, it will indicate that the market opens at 8 AM. Yet other sessions will remain open depending on the geographical location.
Market News
For investors and traders who are curious about currency and rates in 2022.
Channel NewsAsia has recently reported that the Singapore dollar has touched all-time highs against the yen and ringgit and strengthened against the euro and the pound. The article has also explained the influential impact of FED rate hikes as a starting point for changes in value. Nonetheless, the article keeps in view that Singdollar’s outperformance remains uncertain over the next quarter as the economy continues its road to recovery.
Elsewhere in Britain and the UK, Prime Minister Boris Johnson’s resignation is thought by some to have a minor impact on the market. Bloomberg reports that the Sterling is already down 11% this year and is increasingly at the mercy of global risk sentiment.
Lastly, to account for the world’s major currencies, during the 14th BRICS Summit, bitcoin.com quoted that the five major emerging economies are “creating an international reserve currency”, with some analysts speculating that it is meant to rival the U.S dollar and the IMF Special Drawing Rights (SDRs) Currency.
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG).
We provide premium customer service at an affordable cost to all our clients. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.
What is forex trading and how does forex trading work? This post will explain all about forex basics and specific terms that are used such as pips, and currency pairs. It will also introduce some of the most recent news in the forex market in 2022, read on to find out more.
