Forex Trading - Best forex trading platform 2021

Last updated: 17.05.2021
Tim Parker
Author:
Tim Parker
Adviser
CFD & Trading
Experience
25 years

Foreign exchange, known as forex or FX, is the global market where one currency is exchanged into another currency for business, trading, or swapping one currency for another for travel. This takes place by an over-the-counter-market. 

Forex trading is dealt via the ‘interbank market’, on a foreign exchange market, 24/7, 5 days a week and is the largest, most liquid global market, with turnover calculated at US $ 5.1 trillion in daily volume. Currencies are traded in opposition to one another in pairs. For example, the United States Dollar versus the Japanese Yen.

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  • What is the forex market
  • Forex spreads
  • The forex trading sessions
  • What causes forex to fluctuate?
  • Which currency pairs should you trade
  • Forex trading
  • What is a forex trading platform
  • Forex trading online
  • Track your trades
  • Conclusion

What is the forex market

Few people realize the importance of the foreign exchange market and how it affects our daily lives. The forex market is the place where currencies are exchanged to control business trade, and purchase goods in foreign countries when travelling. A Japanese traveller holidaying in Rio de Janeiro can not pay for a day-trip hang-gliding tandem flight with Yen as it is not the currency accepted in Brazil. He has to exchange the Yen he is holding for the Brazilian Real.  The exchange rate between the Yen and the Brazilian Real – based on supply and demand – determines how many Brazilian Real will be received for the Yen paid. The rate changes continuously.

What is unique about the forex market is that it is an international market with no central place for business to be conducted. Trading of currencies is done over-the-counter. This means that transactions take place between traders via computer networks around the world. Trading forex occurs in the world’s financial centres in New York, Paris, London, Zurich and Frankfurt in the western world, across each time zone, moving to Tokyo, Hong Kong, Singapore and Sydney. Investment and commercial banks carry out forex trading on behalf of their clients. Through this, opportunities for the individual investor trading a currency versus another became available and the forex trading online concept on a forex trading platform. The forex market is made up of forex brokers like nextmarkets, central banks, commercial companies, investment management firms and of course, online traders.

Forex trading occurs during the 24-hour cycle, within forex sessions. As one forex market closes, another opens. Forex trading is an extremely active, exciting market with prices changing all the time. Depending on the time of day in the participating market, certain times like opening sessions are more active. Other times during the day trading sessions are quieter and more muted.

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Forex spreads

There are no exchange, brokerage nor clearing fees paid in trading Forex as forex brokers are paid by the “spread”. Trading the foreign exchange markets means that you can trade non – stop as opportunities arise, so you don’t have to wait for the opening bell  as the  forex market never sleeps, Monday to Friday. This makes trading on a part-time basis achievable. You can set to close your position once profit is reached or close a position that goes against you automatically by setting your online platform. The Forex market is huge, it’s massive and very liquid which means that you are never stuck in a trade.  If you are looking to just get started with the world of forex, head to our Forex trading for beginners page. 

The seven most traded currency pairs are easier to monitor than thousands of stocks. The stock market closes after trading so you are only able to trade during trading times while the forex market is seamless and trades 24 hours a day, Monday to Friday. Short trading is restricted on the stock market while the forex market has no restriction on short trading. To take advantage of the forex spread, head to our forex trading strategies page.

The forex trading sessions

The forex market consists of three sessions, namely the North America, the European and the Asian sessions. These trading sessions are known as the New York, London and Tokyo sessions.  The foreign exchange is the most liquid of all the global markets. The daily trading volume of trades on the forex market exceeds $5 trillion. Keep in mind the forex trading hours. 

The Asian/Tokyo trading session 

The Asian markets start the forex market trading sessions and are live between 00:00 – 06:00 GMT. The Asian markets are therefore the first to observe market sentiment, react to occurences and set the pace. Activity is represented by the Tokyo market, which is globally, the 3rd largest forex market. The Yen  makes up for 16. 8% of forex transactions and is the third most traded currency. The Asian session makes up about 20% of forex trading volume. Forex trading is not limited to Japan but other major financial centres such as Australia, New Zealand, China, Singapore and Russia are also big participants. Japan’s economy depends on exports and the main market contributors are exporters and central banks.

Most action occurs early in the Tokyo session. It is to your advantage to be aware when economic data is released as data affects the markets action. The Tokyo session sets the mood for the trading market day and quite often, after large advances or declines, consolidation can occur in the Asian session.

Bear in mind that news from China, being a superpower as well, affects the markets negatively or positively, causing volatility. To trade during the Asia session, head to our best forex broker page to see who can offer you the service.

The European/London trading session

As trading comes to an end in the Asian session, the European or London session starts the trading day. London’s time zone is beneficial to its trading as part of London’s morning trading runs concurrently with afternoon trading in Asia and part of its afternoon trading runs concurrently with the New York session. 43 – 45 % of trade made during the European trading sessions occur in London. The other major financial centres in Europe are Geneva, Frankfurt, Zurich, Paris, Hamburg and Amsterdam.

A larger number of trades take place in the London session, making this session the most volatile.The trend of the day during the European/ London session carries on to the start of the New York session. It is noticeable that trades changing hands slow down towards mid day, when traders break for lunch before trading commences in the New York session. Quite often, the European participants decide to take profit at the end of their trading day. This can cause the trend to reverse. 

The New York trading session

The New York or North American session starts at 8:00 am EST about the same time that European traders as European traders are finishing up with lunch. There are other major financial centers such as Toronto and Chicago, although 18% of all forex transactions. It is crucial to be in tune with the times of release of economic data which are usually issued early in the start of the New York session. Trading overlapping with the London session causes high liquidity in the morning and tends to die down when the European markets close. Markets quieten on a Friday afternoon when European and Asian traders look to end the week. During this time, US traders take profit or close their trades, to restrict any nasty surprises from weekend news. To take a look at the Euro and US dollar currency pair, head to our trade EUR/USD page.

What causes forex to fluctuate?

Foreign exchange, like stocks, reacts to numerous factors such as interest rate hikes, economic well being of a country, government  fiscal and monetary policy changes, and performance data and of course supply – demand economics. Events such as wars or other conflicts take place which  also cause currencies to fall or rise sharply. Natural disasters may also play a role. Massive changes occurred in March 2020, attributed to the COVID-19 pandemic. A huge amount of uncertainty about the future affects the forex markets profoundly.

 The rate of unemployment rose to much higher levels than at the worst point of the financial crisis. Demand for the dollar sky – rocketed as investors looked for protection in this safe-haven currency.  The rate of employment of  a country is very important to Central banks as it determines the health of a country. An increase in unemployment accompanies  rises to interest rates.  Central Banks focus on  balancing inflation with growth. 

So  this tells us that emotion, in this case, the “fear factor”  instead of  reliable data, has driven supply and demand.If supply for a currency pair is high and the demand is low, prices will fall.  If the supply for a currency pair is low and the demand is high, prices will be driven higher. Forex market participants determine the supply and demand of a currency pair. For another look at a popular currency pair, head to our Trade USD/JPY page.

Major influencers

Important results to be considered when trading currencies are the US ADP and the Non-Farm Payroll known as the NFP figures. These are released each month with the NFP being the most crucial. The Automatic Data Processing Report predicts what is expected for the NFP report and is delivered before the NFP.  We, at nextmarkets consider these two results when trading currencies and stocks.

Of equal importance is the monthly Central bank rate decision which is decided by the various Central banks. They decide whether to increase or decrease interest rates, or leave rates the same. Their decision is of paramount to the forex trading world. An unchanged decision can result in either bullish or bearish sentiment, while an increase will be seen as bullish for a currency. The future outlook and monetary policies are also announced.

Another factor to be considered is the Gross Domestic Product. This is a principle indicator of  a country’s well- being.  How fast a country grows annually is measured by GDP. The value of a currency falls when the Gross Domestic Product falls below what is predicted, conversely if the opposite occurs and the GDP surpasses expectations, then the value of the currency will rise. Forex traders keenly watch these figures to determine their next profitable move.

Why does the CPI or the Consumer Price Index of a country affect its currency value? The index tells us about the historical average prices fluctuations of consumer purchases  for a basket of food and necessities. Central banks watch a country’s CPI for guidance for their decisions as to rate increase or decrease and policy setting. An example of this is the Canadian Consumer Price Index beating expectations in November 2014. The expected result was 2.2% however, the CPI came in at 2.3%.  For the following 6 years the Canadian Dollar traded up against the Japanese Yen!

Of utmost importance and seen as a major cause to currency fluctuation as the US Dollar is the world’s reserve currency, is the American Federal Open market Committee Meeting known as the FOMC. The committee meets on a monthly basis, giving results of how effective the present economic policy is progressing. “Hawkish” is a term used to describe those members who approve a rate rise, while “Dovish” is the term  used for those approving lower rates. Traders scrutinise this report for clues as to the direction that the Central bank will take and an indication as to which way the currency market will move.

Best forex broker - Nextmarkets

Which currency pairs should you trade

When trading forex, currencies traded are priced in terms of one currency versus the other currency.For example, the Japanese Yen and the U.S. dollar (YEN/USD) or the Euro versus the British Pound (GBP/EUR).If you are new at trading forex, it is wise to go with the major pairs (EUR/USD, GBP/USD, USD/JPY, and USD/CHF), as these normally have the tightest spreads. A spread is the difference between the bid and the ask price. A forex trader buys the ask price and sells at the bid price. The spread is different for each instrument.

Why is it that some trades have a low spread and others a high spread?  When there is an abundance of  liquidity, high trading volume, the spread is low. Where there are fewer market players, the spread is higher. Lower spreads are the fastest way to maximise profits.Most Forex traders trade the seven major pairs. The easiest currency pair to trade is the EUR/USD  as it is the most stable pair. It is the best choice not only among beginners but also for professional traders and one of the most traded pairs due to tight spreads and liquidity.    

Forex trading online

Through forex trading online, traders are able to speculate on currency pairs and spot currencies with forex online brokers on margin. This aids the trader to a small amount of the size of the trade and buying and selling in a few seconds. The online broker acts as a go – between ‘middleman’ between the buyer and seller. The sale is usually facilitated at a commission. We, at nextmarkets are able to offer zero – charged order fees, no custody account management fees, nor flat-rate third-party fees. As with all online brokers, we receive rebates for the transactions that are executed. Our advanced proprietary technology and corporate structure allows us to do away with order commissions that are paid by investors. This cost advantage to you by offering commission – free trading, ensures that your return is further amplified.

Forex trading live

Forex trading live is based on real-time charts and fast buying and selling of currencies and stock execution. Forex live trading uses special platforms, which allow the forex trader to make, identify opportunities, fast – track trading analysis, increase accuracy and make their moves at a speed as they have their currency trades at their fingertips.

What is a forex trading platform

This is an online platform provided by stock or forex brokerage companies which traders use to open and close orders and manage their positions on the  stock or forex market.It provides traders with live  access to the world’s forex market. A number of products such as stocks, derivatives, currencies, commodities, and bonds are traded on the trading platform via stock brokers, market makers or financial services companies. Trading platforms can be used remotely from any location provided there is an internet connection and are mobile – friendly as well. The computer software used for trading to online financial products may also be called a trading platform. This platform allows the trader to complete a trade in an instant. These platforms provide live market prices, news feeds, risk management purpose, and account management. Our trading platform provides traders with the best requirements to trade more profitably.

Forex trading online

We strive to make you more successful at trading the markets. We have designed our trading platform with you, the trader in mind. The platform  has been devised for traders by traders, as we understand the complexities of trading the markets. The benefit of trading through a sophisticated trading platform, coupled with up to 300 trading ideas per month, advice from 22 trading coaches, zero-cost commission on all trades makes this the best amalgamation for successful and profitable trading.

Our platform is web based with full screen mode and the option to place your favorite markets in individual browser tabs. The platform provides easy to follow up to date technical analysis, ensuring that you receive professional analysis directly onto your chart. 

An additional feature is giving you the option to move your limit, safeguard your capital and lock in profit in the desired direction. Your trades are at your fingertips. The mobile app ensures that you never miss a trade… and there is more. Our platform includes sophisticated charts with the most popular indicators from moving averages to Aroon, MACD, Ichimoku, Pivots, RSI and more to assist you in analysing your trade ideas. Once you test our platform you will agree that it is simply the best.

Choosing the best online forex broker makes your success more achievable. We are a brokerage service primed to assist you, to educate you, to work towards your investment goals. 

The fastest way to get onboard is to open your brokerage account using our website or your smartphone. 

Opening an online forex account is similar to the procedure followed in opening a bank account. It should take as few as 6 minutes to complete the required forms. Once your account is verified and funded you are on your way towards working towards an additional income. It is required that you are at least 18 years old.

Track your trades

It is vital to handle your forex trading account as a business. We recommend keeping a record in a stock trading book to keep you organised, track your progress and keep records of your trading activities.Make note of your goals, your trading plan and strategy. Keeping a record of your emotions will keep you in touch with the psychological side of trading and what to work on avoiding becoming too emotional about losses.

Your goals should be realistic, after all there is no elevator to success, you have to take the stairs, it is a slow process, with many learning curves. Protect your business by ensuring that you have a risk management system in place. Like any business you should consider expenses incurred. Keep adding to your knowledge about how it is done by following training webinars and keeping in touch with our trading coaches.

Conclusion

Forex markets may prove to be exactly what you are looking for within  the world of online trading. There are plenty of opportunities out there and with our service, you will be able to take advantage of them while having an expert team to back you and minimal fees related to the service. To learn more about another currency pair, head to our trade GBP/USD page.

Forex trading FAQ

🥇 Which is the most popular currency pairs for a beginner to trade

If you are just getting started within the world of online forex trading, you will probably be on the lookout for the best currency pair to trade. This will allow you to complete your transactions with a certain degree of confidence and allow you to find more news related to the highly active currency pair. Our page takes just about everything into consideration and you can find all of the details right here at nextmarkets. Be sure to visit our site to find all of the information you will need.

 

💱 Which are the safest currencies to trade with forex?

Once you have opened your forex account, you will need to consider what currency pairs you are looking to invest in. There are plenty of options available with each online broker and it might be quite daunting choosing from the lot. Our articles have been put together by a resident team of experts to help guide you through the world of online forex trading. If you are looking for a safer currency pair to invest in, then head to our page now to find our comprehensive look at each of them. Our entire information resource is provided free of charge to anyone that is interested.

 In order to safe-guard your account, to limit risk or to ensure that existing profits are protected, it is essential to determine the methods that your broker has put in place. Methods such as two-factor authentication and encryption of data are crucial in the online world today. You will need to browse through a couple of our reviews to determine just how an online broker protects your account. You will find a section in each of our reviews dedicated to the safety provided by each operator. Head to our page to find out more now.

💰 How do forex brokers make money?

Depending on what broker you have decided to sign up with, you might find that you are paying some fees for simply having an account or when you make transactions. Each broker makes use of their own fee structure and with forex you will also need to consider the spread. Our team of experts here have taken a close look at just how these brokers make money in order to keep their service up and running. Be sure to head to our page where we detail how we maintain our service while keeping our zero fees applicable to your account.

You might have come across the terms since you have begun trading foreign currencies. To put spread in simple terms, it is the difference between the selling price and the purchase price of a currency pair. To find the comprehensive, detailed answer, you will need to visit our page where we take a close look at the forex spread and exactly what it means for your trading career. Our entire information service is provided free of charge to interested customers and you will find all the information you will need right here.

 

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