IQ Option is one of the fastest growing online trading brands in the world. Voted the best mobile trading platform, we have now expanded our offerings to include stock trading, ETF trading, Forex trading and a brand-new product unique to IQ called Digital Options.
First founded in 2013, IQ Option has grown massively, and now has over 25 million members and counting! The platform itself has also undergone some changes since 2013, and we are constantly working to ensure it is fast, accurate and easy to use.
We have also refined our offering and introduced plenty of new products in our bid to continue giving our customers the ultimate online trading experience and to help them optimize their investment portfolio.
Now, using our platform, our members can try online stock trading, Forex currency trading, Exchange Traded Funds (ETFs), and Digital Options.
Introduction to Forex Trading
The foreign exchange market, also known as FX or Forex trading, is one the most fast paced, dynamic markets in the world.
Traditionally, huge global financial institutions, central banks, hedge funds, and the super-rich dominated the Forex trading market. All of this changed with the arrival of the internet. Now there are no barriers preventing anyone from Forex trading. It is completely accessible to most investors, and you can buy and sell international currencies at the click of a mouse from your own home.
What is Forex?
Currency is similar to language, in that it varies from country to country. If you want to do international business or buy goods from abroad, you must pay with the local currency. For instance, you wouldn’t expect to use Swiss Francs to pay for your meal in Marrakech, which is exactly where Forex trading comes in.
Global currencies are traded on the foreign exchange market. Comparing this market to the stock market is one way to grasp the sheer scale of it; the average traded value of the global stock market is around $2,000 billion per day, while Forex trading surpasses $4.9 trillion daily.
Unlike some other markets, this is no central market for Forex trading. Currency trading is all done over the counter electronically on global computer networks between individual traders. There are five major Forex trading centers: Frankfurt, Hong Kong, London, New York and Tokyo.
The Forex market is open 24 hours a day, five and a half days a week, and operates across nearly every time zone, which makes for an active market in a continual state of flux, with prices changing all the time.
How Do I Trade Forex?
When currencies are traded on the Forex market, they are bought and sold in what are known as currency pairs, where one currency is used to buy another.
These pairs have been created to make comparing currencies easier, and as a way to better understand the value of one in relation to the other. The EUR/USD pairing is among the most popular.
In currency pairs, the first currency is the base and the second currency is referred to as the counter currency. So in the previous example, you are using USD to buy EUR. Your broker converts your existing currency into USD, and then uses that to buy EUR. When buying a currency pairing, you take what is known as a ‘long position’, and when selling you take a ‘short position’.
It is vital that you have a good understanding of the current climate of your chosen currency market. If you believe people are going to sell bitcoin, for example, then this will bring the price down in relation to the EUR.
We provide regularly updated information on many popular pairings, and we include the popular Bitcoin cryptocurrency in our currency index.
The majority of Forex traders focus on the following currency pairs: EUR/USD, USD/JPY, GBP/USD, and USD/CHF are the main four, followed by USD/CAD, AUD/USD and NZD/USD. All other pairs are just different combinations of the same currencies.
Trading Forex Risk Assessment
Foreign exchange is a relatively stable market, with most currency pairs moving less than 1% daily, meaning the value changes very little.
However, because of this low level of volatility, many Forex traders utilize the huge leverage to greatly increase the value of these price movements. Leverage in the Forex market can be as high as 250:1, but this higher level of reward also carries a higher level of risk.
The deep liquidity of the Forex market, coupled with the fact trading continues 24 hours a day, means that Forex brokers can make that high leverage industry standard, in turn making any price movements far more meaningful for Forex traders. Time is another factor, and positions can be opened and closed within minutes, or retained for several months. The sheer size of the Forex market makes it impossible for the bigger players to start manipulating prices, as well.