Forex Trading FAQ

Forex Trading FAQ

Short selling a currency, occurs when you believe a currency is overvalued. To gain in that position you short sell the currency hoping to buy it back when the price normalizes. Short sellers are called bulls in the forex trading market. Let’s say you are holding US$1,000 and it is currently priced at USD/ZAR 14.9877. You have a bullish sentiment and believe the dollar is overpriced, you sell the USD/ZAR at current market rates to obtain R14,987. A week later the market forces bring the price back to equilibrium of USD/ZAR 13.89244. You buy the $1,000 at 13.892444 making a profit of R1,905

You take a long (buy) position on a currency that you think is underpriced, hoping to sell it later at its higher fundamental price. Investor who take long positions are called bears.

Spread is the difference between the Bid (sell) and Ask (buy) price of a currency pair and it represent the profit/ loss on a particular trade.

Leverage is making use of borrowed funds to make a trade above the limit of your current float. It allows you to make abnormal profits while minimizing the risk on your capital. For example, if you have 1:100 leverage you can execute a buy or sell order of $100,000 with a $1,000 margin deposit. Higher leverage increases the potential of higher profits and also exposes you to huge losses if handled without proper risk management.

Hedging is engaging in an investment to protect potential losses from risky investment. Hedging is done to protect one’s portfolio against risks of inflation, rising interest rate, political and social risks.

Margin trading allows you to execute trades worth more than your available funds. It acts as a collateral for a position.

When your account falls below the minimum margin your trader invites you to deposit funds and restore it back to maintenance margin or above. A margin account acts as leverage, and it allows you to make investments or execute trades using the broker’s money.

If a real account is unused for a continuous period of three months, it will be automatically sent to an archive. However, should you wish to start trading at a later date, you can restore your account and your funds will be conserved.

Your broker will not allow you to lose more than your available funds. Any loss larger than your deposit falls under direct loss of your Forex broker, as such it is in his best interest to prevent such losses.

you can manage risk using the forex trading tools like the limit and stop orders. A limit order restricts maximum price to be paid or the minimum price to be received for a currency. A stop order ensures liquidation of a position at a predetermined price in order to limit potential losses that might arise from adverse price movements.

Overnight positions are active for over normal trading hours of a day and usually rolled over to the next day’s price by your forex broker. Intraday positions are executed during normal trading hours and can be opened or closed during the trading hours.

You can use a demo account for as long as you want. If your demo account has been inactive for a continuous period of three months it will be inactivated, but you can however reopen another demo account anytime you wish to start.

We have complete courses designed for new traders, without any forex trading experience. Trading signals are accessible in our main menu tab, and they provide you with a report of underlying assets, their price variations and indicators on how you should react to certain news.

The minimum amount required to open an account is US$50.

We do not charge any commission on forex trades. We get our compensation from the spreads between given trades. However, you can incur a rollover charge if you hold your position overnight.

Futures trading allows you to lock the price of an exchange rate today, for execution at a certain predetermined future date. Futures trading of foreign currencies is done in trading pits.

if you wish to sell at a price above the current market price you place a sell limit, if you want to sell below the current price you place a sell stop. If you wish to buy above the current market price you place a buy stop, while buying below the market price you place a buy limit.

Download MetaTrader 5 for PC to enjoy the convenience for trading in forex markets and benefit from a leverage of from 1:1 to 500:1. With MetaTrader5 you can analyse performance of financial markets, copy deals of professional traders, analyse prices and manage trades.
MT5 offers you a broad range of currency pairs and trading signals to choose from, it also allows trading in Indices, Futures and Equities and it supports multiple account base currencies including EUR, USD, JPY, GBP, and ZAR. The MetaTrader 5 platform can be installed on Windows, Mac, Linux or Android and has a user-friendly interface.

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