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What is forex?

Forex (FX) is the abbreviation of foreign exchange (exchange). When trading with Forex, two currencies are exchanged against each other: The purchase of one currency leads to the simultaneous sale of another.

Currencies are always traded in pairs, which is why they are also called currency pairs. The FX trading market - the largest financial market in the world - is often referred to as the foreign exchange market or currency market. Learn how to trade forex via CFDs with leverage in this free guide!

How does Forex trading work?

In currency trading, individual clients, businesses, and organizations trade or exchange different currencies around the world. In currency trading, the first currency in the pair is called the base currency and the second currency is called the quote currency. As a trader, you speculate on the evolution of the exchange rate: Is the exchange rate of one country's currency rising or falling against another country's currency? We clearly explain the principle with the help of the following two trading examples.

Variation A: For the currency pair EURO/US-DOLLAR (EUR/USD), you assume that the EUR will rise against the USD. As a forex trader, you go LONG (buy).

Variation B: For the EUR/USD currency pair, you assume that the euro will lose points against the USD. As a forex trader, you opt for a SHORT (sell) position.

With CMC Markets, you have the opportunity to trade with leverage when trading forex via CFDs (Contracts for Difference). So you only deposit margin in your account, a fraction of the value that moves in the market, even if you trade the entire volume.

Margin and Leverage in Foreign Exchange (FX) Trading

The use of leverage can be useful if you have little capital, but it is also particularly suitable for forex trading due to the relatively small fluctuations in exchange rates: Exchange rates are not generally subject to only minimal fluctuations, sometimes only to the fourth decimal place. These price fluctuations, called pips, are made financially noticeable by the leverage and narrow spreads between buying and selling with your Forex broker.

Our forex margins start at 3.3% for retail investors. This means a maximum leverage of 1:30 for you. However, please note that leverage works both ways in Forex and CFD trading: The high potential profits are offset by an equally high risk of losses, which is also a disadvantage in forex trading. . For your first steps, we recommend using a demo account: Practice first as a trader before getting into real Forex CFD trading.

Forex trading with CMC Markets

CMC Markets was one of the first companies to offer online Forex trading to private participants and investors in the UK in 1996. As a result, we have many years of experience dealing with traders and Forex products. Currently, 330 FX currency pairs are available via CFDs on our own Next Generation trading platform and more than 36 FX currency pairs on the MetaTrader 4 platform. These include classic currency pairs, called major currencies, major industrialized countries, such as the US dollar, the euro or the Japanese yen. But you can also trade minor currency pairs from emerging countries and emerging markets, such as CFDs on the New Zealand dollar or exotic currencies such as the Indian rupee or the South African rand. We would love for you to choose CMC Markets as your future Forex CFD trading partner. You benefit from:

Forex CFDs on over 330 major and minor currency pairs as well as exotics

Spreads from 0.7 points

Innovative charting and trading tools from the Next Generation trading platform or MetaTrader 4 (MT4)

Integrated risk management with guaranteed stop-loss orders (OSLG)

Our award-winning* trading app for all mobile devices

French customer service and a company with decades of experience in CFD trading

Forex trading hours

Unlike stock trading, which takes place, for example, on the French stock exchange between 9:00 a.m. and 5:30 p.m., there are no fixed hours for Forex trading. Since no exchange or institution regulates trading like stocks, you theoretically have the option - depending on the currency pair, bank and broker - of trading Forex around the clock. During the winter months, the main Forex trading window is Sunday 10:00 p.m. to Friday 11:00 p.m. During the summer months, the hours are staggered by one hour each. Trading hours are based on the working hours of brokers and banks that handle the currency exchange.

Where can I find the opening hours of the relevant stock exchanges?

Even though currency trading is interbank trade which takes place off-exchange and is therefore not linked to the opening hours of stock exchanges, the main trading hours of a currency overlap with the opening hours of the relevant exchanges. . It may therefore be interesting to at least keep them in mind. You can find the detailed opening hours of the stock exchanges on the relevant website and also below:

Frankfurt Stock Exchange

London Stock Exchange

New York stock market

Sydney Stock Exchange

Tokyo Stock Exchange