The foreign exchange or the forex market is accepted as the most active and liquid financial markets in the world. Global daily forex turnover is estimated to be over $1.7 trillion.
The spot forex market is an over-the-counter market and is different from exchange-traded products because it has no physical location or central exchange. Foreign exchange trading takes place in the world major financial trading centers with the main centers being London, New York and Tokyo.
Trading hours are rarely restricted and prices are typically available in the major currency pairs almost without interruption during the working week. This liquidity and frequent volatility makes the trading of currencies an attractive investment opportunity for the experienced market participant.
Forex trading has many investment benefits some of which are:
Forex market is much more cost efficient to invest in terms of both commissions and transaction fees. In general, the width of the spread in a FX transaction is less than 1/10 as wide as a stock transaction.
Product |
Symbol |
Contract Size |
Spread |
Stop-Limit Orders |
Minimum Fluctuation |
Margin |
Trading Hours (GMT) |
Euro vs. |
EURUSD |
100,000 USD |
2 PIPS |
5 PIPS |
1 PIP = $10 |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
British Pound |
GBPUSD |
100,000 USD |
3 PIPS |
5 PIPS |
1 PIP = $10 |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
US Dollar vs. Japanese Yen |
USDJPY |
100,000 USD |
2 PIPS |
5 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
US Dollar vs. Swiss Franc |
USDCHF |
100,000 USD |
3 PIPS |
5 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Australian Dollar vs. US Dollar |
AUDUSD |
100,000 USD |
3 PIPS |
5 PIPS |
1 PIP = $10 |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
US Dollar vs. Canadian dollar |
USDCAD |
100,000 USD |
2 PIPS |
5 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
New Zealand Dollar vs. US Dollar |
NZDUSD |
100,000 USD |
3 PIP |
5 PIPS |
1 PIP = $10 |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Product |
Symbol |
Contract Size |
Spread |
Stop-Limit Orders |
Minimum Fluctuation |
Margin |
Trading Hours (GMT) |
Euro vs Japanese Yen |
EURJPY |
100,000 EUR |
3 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Euro vs British Pound |
EURGBP |
100,000 EUR |
3 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Euro vs Swiss Franc |
EURCHF |
100,000 EUR |
3 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
British Pound vs Japanese Yen |
GBPJPY |
100,000 GBP |
7 Pips |
15 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Euro vs Australian Dollar |
EURAUD |
100,000 EUR |
15 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Euro vs Canadian |
EURCAD |
100,000 EUR |
15 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
British Pound vs Australian Dollar |
GBPAUD |
100,000 GBP |
15 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
British Pound vs |
GBPCHF |
100,000 GBP |
7 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
British Pound vs Canadian Dollar |
GBPCAD |
100,000 GBP |
15 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Swiss Franc vs Japanese Yen |
CHFJPY |
100,000 CHF |
4 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Australian Dollar vs Canadian dollar |
AUDCAD |
100,000 AUD |
8 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
New Zealand Dollar vs Japanese Yen |
NZDJPY |
100,000 NZD |
6 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Australian Dollar vs Japanese Yen |
AUDJPY |
100,000 AUD |
5 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Australian Dollar vs |
AUDNZD |
100,000 AUD |
20 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Canadian Dollar vs Japanese Yen |
CADJPY |
100,000 CAD |
5 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Australian Dollar vs Swiss Franc |
AUDCHF |
100,000 AUD |
8 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
Canadian Dollar vs Swiss Franc |
CADCHF |
100,000 CAD |
8 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
New Zealand Dollar |
NZDCHF |
100,000 NZD |
8 Pips |
10 PIPS |
Variable |
1000 USD |
Open: sun 21:00 Close: Fri 21:00 |
A client believes that the EUR is due to rise in the future against US dollar, to get benefit of the situation the client intends to buy EURUSD. EURUSD is quoted at 1.3740 - 1.3743, the client buys 2 lots at 1.3743, the client requires minimum deposit of 1000 $ for each lot.
EURUSD prices rise to 1.3810 - 1.3813, the client is satisfied with his profit and wants to close his positions, he therefore sells 2 lots of EURUSD at 1.3810, so the client has made profit of 67 points (1.3810 - 1.3743 = 0.0067) . To calculate the profit we will do the following:
*Commission charges are NOT included in the above calculations
A client believes that the JPY will weaken in the future against US dollar, to get benefit of the situation the client intends to buy USDJPY. (Buying USD & selling JPY)
USDJPY is quoted at 112.50- 112.53, the client buys 4 lots at 112.53, the client requires minimum deposit of 1000 $ for each lot.
USDJPY prices rise to 112.95- 112.98, the client is satisfied with his profit and wants to close his positions, he therefore sells 4 lots of USDJPY at 112.95, so the client has made profit of 42 points (112.95 - 112.53 = 0.42)
. To calculate the profit we will do the following:
*Commission charges are NOT included in the above calculations