1. What is Foreign Exchange?
The Foreign Exchange market, also referred to as the “FOREX” or “FX” market, is the largest financial market in the world, with a daily average turnover of approximately US$3.1 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world’s currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.
2. Where is the central location of the FOREX Market?
FOREX Trading is not centralized on an exchange, as with the stock and futures markets. The FOREX market is considered an Over the Counter (OTC) or “Interbank” market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.
3. Who are the participants in the FOREX Market?
The FOREX market is called an “Interbank” market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.
4. When is the FOREX market open for trading?
A true 24-hour market, FOREX trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur — day or night
5. What are the most commonly traded currencies in the FOREX markets?
The most often traded or “liquid” currencies are those of countries with stable governments, respected central banks, and low inflation. Today, over 85% of all daily transactions involve trading of the major currencies, which include the U.S. Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar.
6. Is FOREX trading capital intensive?
No. Active-Forex requires a minimum deposit of $100. Active-Forex allows customers to execute margin trades at up to 400:1 leverage. This means that investors to execute trades up to $100,000 with an initial margin requirement of $2000. However, it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great. A more pragmatic margin trade for someone new to the FOREX markets would be 5:1 or even 10:1, but ultimately depends on the investor’s appetite for risk.
7. What does it mean have a “long” or “short” position?
In trading parlance, a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. In this scenario, the investor benefits from a rising market. A short position is one in which the trader sells a currency in anticipation that it will depreciate. In this scenario, the investor benefits from a declining market. However, it is important to remember that every FOREX position requires an investor to go long in one currency and short in the other.
8. What is the difference between liquidity and volatility?
Volatility is a statistical measure of a market’s price movements over time. Volatility is high if prices change dramatically in a short period of time.
Liquidity is a market condition that allows large transactions to be absorbed by the marketplace with little or no effect on price stability. With a daily trading volume that is 50x larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the FOREX markets, thereby assuring liquidity.
9. How are currency prices determined?
Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the FOREX market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as Central Bank intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices. However, the size and volume of the FOREX market makes it impossible for any one entity to “drive” the market for any length of time.
10. How do I manage risk?
The most common risk management tools in FOREX trading are the limit order and the stop loss order. A limit order places restriction on the maximum price to be paid or the minimum price to be received. A stop loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor’s position. The liquidity of the FOREX market ensures that limit order and stop loss orders can be easily executed.
11. How do I open an account?
Follow the steps in the OPEN ACCOUNT section. These include printing and signing the general account forms and funding your account. If you wish to get started trading immediately, you will need to send a cashier cheque/money order or wire funds. Personal cheques may take up to eight business days to clear.
12. How long does it take for an account to be opened?
Most new accounts are typically approved and opened within 24 hours.
13. What is the fastest way to open an account and begin trading?
Complete the account application forms online and fund your account with a credit card
14. Are there monthly or annual account fees?
No.
15. Are there inactive account fees?
No.
16. Are there additional fees for limit orders, stop orders or special orders?
No.
17. How do I make additional deposits?
By credit card and bank wire.For more info please visit http://www.active-forex.com/deposit-instructions.php
18. How do I make withdrawals?
Just call us, e-mail us the instructions.
19. Do you accept U.S. residents as accountholders?
Our services are not solicited to U.S Citizens
