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- How to open AvaTrade’s Forex trading account?
- Introduction to the Forex market
- Advantages of trading Forex with AvaTrade
- What you can trade with AvaTrade?
- Major and Minor Forex currency pairs
- Start trading Forex and CFDs with AvaTrade
How to open AvaTrade’s Forex trading account?
With AvaTrade, you can open a Forex trading account for free.
The first easy and simple registration only requires your email address and some main details about yourself.
Follow the simple steps below to open a Forex trading account with AvaTrade today.
- Go to AvaTrade Official Website.
- Click on “Register Now” button”
- Enter your email address and password you prefer.
- Receive a confirmation email from AvaTrade.
- Follow the link in the email to continue with the registration.
- After completion, log in to AvaTrade’s client portal (web trader)
- Make a deposit with any method you prefer.
- Start trading Forex and CFDs.
Do you have any questions regarding the account opening or online trading?
Contact AvaTrade’s multilingual support team available 24 hours a day and 5 days a week.
Introduction to the Forex market
It is crucial for all traders that are thinking about entering the forex and other markets to obtain some knowledge about forex and the forex markets.
This way you will be able to identify trading opportunities and make informed trading choices.
Timing is critical and AvaTrade wants to assist you in how to time the markets, when to anticipate to take profit and when to close a trade.
The foreign exchange market, also known as the FX or forex market, is the largest and most traded financial market in the world.
The FX market has grown to a daily trade volume of more than $5 trillion USD approximately 200 times bigger than the New York Stock Exchange.
Historically, the major players in the forex market were large central banks, multinational firms and big financial institutions.
While these organizations are still the major players in the market, the growth of online brokers has made it possible for anybody to access this market and trade on a level playing field.
As an example:
We are visiting the US from the UK. One GBP equals 1.30 USD. So we decide to exchange £1,000 and we receive $1,300 at an exchange rate of $1.30.
A week later we return to the United Kingdom with $500 left. However, the exchange rate of the GBP/USD has decreased to $1.10 for each GBP (meaning that the USD/GBP dropped).
During our holiday the exchange rate changed and now £1 equals $1.10. This means that the GBP weakened against the USD over that period of time.
So we exchange our $500 back to sterling at a rate of $1 for £0.9090 (1/1.10) and receive £454.54 in return.
By default, we have just made a profit in the FX Market.
Advantages of trading Forex with Avatrade
There are many benefits to trading Forex, here we have summarised a few for you:
1. Continuous Operation
The FX market is open 24 hours a day, 5 days a week.
This means you can open and close trades at any hour of the day, unlike in other markets, e.g. commodities and stocks.
The highest volume of trading usually takes place as the various global markets open throughout the day – starting in Sydney, moving on to Tokyo, London and finishing in New York.
The FX market has huge appeal for the retail trader as it is an extremely liquid market.
A liquid market means that there are a huge number of buyers and sellers resulting in swift trade execution – both buying and selling – at all times during market hours.
Due to the high level of liquidity in the FX market, most brokers will offer higher leverage than other markets.
This means that a trader only requires a small percentage of the overall price of a position.
For example, if you had the leverage of 200:1 and have $500 to invest, you could take a position of $100,000.
When you use leverage small movements in the price of a currency have greater weight, which can lead to greater gains on smaller investments.
However, leverage does work both ways and can magnify losses.
4. Low Entry Requirements
Due to the high level of leverage, it is possible to open accounts with exclusive FX brokers such as AvaTrade from as little as $100.
This is a much lower entry-level than other types of investments.
This too minimizes your risks when getting your feet wet in the trading world.
5. Low Transaction Costs
FX brokers mainly generate their revenue from the difference between the buy and sell prices, known as the spread.
Due to the high trading volumes, it is quite a small fee when compared to the fees charged by a traditional stockbroker, for example.
At AvaTrade, they offer you the choice of fixed or floating spreads also known as variable spreads and they change based on liquidity – which is based on the lowest interbank market prices available at the moment you place your order.
6. No Market Manipulation
It is nearly impossible for one big player to corner or manipulate the FX market due to its size.
Unlike smaller markets where a large institution may be able to affect the price by placing a big order, the FX market is so big this will not have a major impact.
Government decisions, policies and reports, along with other global news stories are the most likely the cause for large movements.
What you can trade with AvaTrade?
A country’s currency is a direct reflection of what the market thinks about the current and future health of its economy.
A recessionary, stagnant economy will result in a weak currency, while a growing economy will result in a strong currency.
We are therefore speculating on the strengths and weaknesses of one economy or country against another.
Major and Minor Forex currency pairs
When trading FX, currencies are abbreviated into three-letter symbols.
For example, the Euro is the EUR, the US Dollar is the USD, and so on.
Currencies are generally split into two categories – the major currencies and the minor currencies.
The majors are the currencies of the biggest global economies – the US (USD), Japan (JPY), UK (GBP), Euro Zone (EUR), Canada (CAD), Australia (AUD), Switzerland (CHF) and New Zealand (NZD).
The majors are by far the most frequently traded currencies and makeup around 90% of the FX market.
Minor or exotic currencies are those of less prominent or emerging economies, such as the Hong Kong Dollar, Mexican Peso, Swedish Krona and Hungarian Forint.
They are traded in smaller quantities than the majors and often the cost of making a trade is much higher due to their illiquidity.
How does a currency pair work?
Currencies are traded one against each other.
In a currency pair, the currency to the left is called the base currency in the example below it is the EUR.
The currency to the right is called the secondary currency in the example would be the USD.
The secondary currency tells us how much it is worth against 1 unit of the base currency.
So if we say the EUR/USD is trading at 1.3000 it means €1 equals $1.30.
The base currency is the basis for the buy or the sell trade.
If we believe that the Euro will strengthen against the US Dollar we would buy the EUR/USD pair.
This means we are buying the base currency (the Euro) and simultaneously selling the secondary currency (the US Dollar).
If we believe the Euro will weaken against the US Dollar we will sell the pair.
In this case, we are selling the Euro and simultaneously buying US Dollars.
Buying the base currency is known as “going long” – looking to profit from the pair rising.
When we sell the base currency it is known as “going short” and we are trying to profit from the currency pair falling.
Major Currency Pairs
Major currency pairs all contain the US Dollar on one side – either on the base side or the secondary side.
They are the most frequently traded pairs in the forex market.
The majors generally have the lowest spread and are the most liquid.
The EUR/USD is the most traded pair with a daily trade volume of nearly 30% of the entire FX market.
- Europe / United States
- United States / Japan
- United Kingdom / United States
- United States / Canada
- United States / Switzerland
- Australia / United States
- New Zealand / United States
Minor and Cross Currency Pairs
Currency pairs that do not contain the US Dollar are known as cross-currency pairs or simply “crosses”.
The most active crosses are derived from the three major non-US dollar currencies (the Euro, the UK Pound and Yen).
These currency pairs are also known as minors.
- Europe / United Kingdom
- Europe / Switzerland
- Europe / Canada
- Europe / Australia
- Europe / New Zealand
- Europe / Japan
- United Kingdom / Japan
- Switzerland / Japan
- Canada / Japan
- Australia / Japan
- New Zealand / Japan
- United Kingdom / Switzerland
- United Kingdom / Australia
- United Kingdom / Canada
Exotic Currency Pairs
Exotic currency pairs are made up of a major currency paired with the currency of an emerging or a strong smaller economy such as Hong Kong, Singapore and European countries outside of the Euro Zone.
These pairs are not traded as often as the majors or minors.
The cost of exotic pairs can be higher due to the lack of liquidity in these markets.
- EUR / TRY
- Euro / Turkish Lira
- USD / SEK
- US Dollar / Swedish Krona
- USD / NOK
- US Dollar / Norwegian Krone
- USD / DKK
- US Dollar / Danish Krone
- USD / ZAR
- US Dollar / South African Rand
- USD / HKD
- US Dollar / Hong Kong Dollar
- USD / SGD
- US Dollar / Singapore Dollar
How Forex currency pairs are quoted
As we have already seen, when a currency is quoted it is paired with another currency.
So the value of one is reflected through the value of another.
The base currency is to the left of the pair and the secondary currency is to the right.
Let’s look at an example: Going back to the popular trading pair – the EUR/USD.
Once logged into the platform the trader will check the ask and bid prices; for the purpose of the example they will be ‘1.2356 (bid), and ‘1.2359 (ask).
The difference, as noted, is of 3 pips and this will go to the broker.
If the trader believes the Euro will go up he will enter a ‘buy’ command.
Then he will be required to select an amount – say 10,000 units.
The price for that is $12,356, and using leverage comes to $30.89.
If the market responded the way the trader predicted and the Euro rose from 1.2356 to ‘1.2360 – 4 pips, the trader would have made a profit from this trade.
You may have noticed that when we trade financial instruments such as currencies we are offered two slightly different prices.
- AvaTrade has the sell price (also known as the bid price) and the buy price (also known as the ask price).
- The bid price is the best available price at which we can sell to the market.
- The ask price is the best available price at which we can buy from the market.
So to re-iterate: The difference between the two prices is what we call the spread and this is how a broker generates revenue.
It is the cost of placing a trade.
In this case, we can see the EUR/USD has a ask price of 1.2359 and a bid price of 1.2356.
The difference between the two is 0.0003 or what we call 3 pips.
Start trading Forex and CFDs with AvaTrade
- Real Account Promotion for New Client
- As a new AvaTrade client trading with a real account, you will enjoy unsurpassed educational materials as well as special bonuses and additional benefits, giving you a perfect head start when trading with AvaTrade. Open an AvaTrade demo trading account and test your skills in the live markets today at no cost and risk-free.
- Build your knowledge base with Sharp Trader
- All AvaTrade clients are eligible for a free membership to Sharp Trader, giving you complete access as a beginner or advanced trader to basic, forex and commodity training. You can view videos, get your daily technical and fundamental analysis and articles by professional traders and much more.