The foreign exchange market, called also forex or the FX, is the largest financial market in the world. It is the most liquid one as well. High volatility creates more opportunities for trading. Today I am going to explain how to trade forex on the IQ Option platform. The base for the FX is purchasing one currency for another. The main task is to speculate on the future price of the asset and buying and selling currencies accordingly.
Daily trading volume on forex reaches $6.6 trillion. In comparison, a daily volume for the NYSE or LSE is at least several hundred times smaller.
You get the chance to place a deal on the forex market 24 hours a day, 5 days a week (or even 7 with OTC Forex instruments on IQ Option). The market opens at 0:00 GMT Monday and closes at 21:00 GMT Friday.
Contents
Financial instruments on forex
You trade national currencies on the forex market. They are arranged in pairs so you know exactly which currency you will need to sell in order to buy another one.
IQ Option offers a variety of different countries' currencies. Most commonly traded are the Euro, the US dollar, the British pound, the Australian dollar, and the Japanese yen. The US dollar has managed to retain its status as the dominant currency, staying on one side of 88% of all transactions.
To see all the available currency pairs (of which there are 41), log in to your IQ Option account and click on the plus icon in the top left corner of the platform. Then, choose Forex and the list of the assets will be displayed.
The quotes
The currency quotes are the latest prices agreed between buyers and sellers. There are two prices in a quote; Ask and Bid. The ask determines the price at which the instrument is purchased, and the bid specifies the price at which the asset is sold to others. When you calculate the difference between the ask and the bid prices, you will get a spread. It is a commission that the broker charges to perform a transaction.
The IQ Option platform offers you the possibility to check the ask/bid prices at all times. You just have to mark such an option in the settings.
A multiplier
The movements of the prices are not very high on a daily scale. They are usually in the range of 1% only. This does not promise spectacular profits. However, there is a tool you can use on IQ Option which increases the potential earnings. It is called a multiplier.
The multiplier is a marvellous feature that has to be used with care. You ought to be aware of the fact, that it multiplies not only wins but losses as well.
Decide on the amount you wish to invest in a trade and then choose a suitable multiplier. In the example below, the invested amount is $100 and the multiplier x1000. This means that the order will be carried out as there were $100,000 in the game.
The volume of your order, as well as pip value, will be displayed on the right side of the trading interface.
Auto-closing
You have chosen the invested amount and a multiplier. You have decided whether you are buying or selling. What now? I have some good news. You do not have to sit at the computer desk all day long to follow the price fluctuations and catch the best moment to end a transaction. There is a possibility on the IQ Option platform to set auto-closing for your position.
To place auto close you will have to enter two values. One is called a stop loss and the other take profit. The stop loss specifies the amount of the loss you can agree on before the transaction will be closed. The take profit defined the level after reaching which, the position will be automatically closed.
Forex volatility
As I have already mentioned, the forex market is extremely volatile. What stands behind prices fluctuations is the law of demand and supply. When the demand for a specific currency increases, the price will rise. And when the supply grows, the currency's price will fall.
There are many factors that influence the demand and supply of currencies. It can be, among others, inflation, the political situation, the economic conditions, the country's central bank monetary policy, economic reports on the GDP changes or unemployment. Moreover, unique events as for example Brexit also affect the exchange rates.
Summary
The forex market gives tremendous opportunities to earn profits trading. It is not only the largest financial market but besides the most liquid one. There is, naturally, a relatively high risk involved in trading on FX. This is why you should be well prepared.
Learn about the foreign exchange market. Then, use the IQ Option free demo account to trade on the forex market. Over time you will learn the rules of forex trading and you will be able to invest real money in the IQ Option live account.
Check the economic calendar to be up-to-date with the latest news releases. Use this information in your favour.
Are you keen on forex? Share your experience with us in the comments section below.
Wish you high profits!
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