Top Questions Beginning Forex Traders Ask Themselves

When you get into the Forex broker business, it’s important to make sure you know what to expect. You’ll have to expect some heavy competition, the difficulties of obtaining a quality Forex license, some hard legwork, and questions. Many, many questions – especially from traders just starting out in the field, hungry for money and success, but with few tools in their own mental arsenal to really utilize your features and offerings to their best potential.

It’s these questions that you’ll have to be able to answer succinctly and with enough detail to impress – all while imparting a general understanding of the world of Forex. Not only will this help you in leagues with your SEO, aiding you in finding more clients through Google and other search engines – it’ll also help you prove yourself an expert in the industry alongside your Forex license, and establish your specific brokerage as the best place to invest and make more money through Forex trading online.

That being said, there’s more to running a successful online Forex brokerage than knowing the basics, being able to train your traders to refine their existing skills or begin from scratch, or even market yourself online – there are dozens of factors to consider in total – but building a proper FAQ for beginning traders is a great way to invite potential traders to take that final step and start trading for real.

1. What makes Forex unique?

The foreign exchange market does have a number of oddities that clearly spell it different from the rest of trading market, such as securities exchanges. For one, there is no heavy regulation in the Forex market. There is no NYSE, no NASDAQ, no TSE. There is only the Forex market, and it trades 24 hours a day from 5pm Sunday to 4pm Friday, Eastern Seaboard Time.

2. What is the business model behind Forex?

Typically, when stock is traded, an investor goes through a broker to act as the middle man between the investor and a company. To perform this exchange, the broker is paid a commission.

In Forex, this is not how it works. Instead, brokers or dealers make money through what is called the bid-ask spread. Basically, if the bid is $1.x2 for a Euro, and the ask is $1.x5, the spread is 0.03, or 300 pips. A pip is a percentage in point – so basically, 1/100th of a percent of a currency is a pip. In that sense, the price of the Euro in dollar wouldn’t be noted as $1.25, but 1.2500.

The closer the spread, the more liquid a trade is. Traders may want a better bid-ask spread to be able to move more currency at a faster rate, and brokers may want the spread to be larger to make more money off the difference. That’s where brokers make money – off the difference between the actual price on the market, and their offer’s bid-ask spread.  Then, through a Forex bridge like FXBS, they can help bring the trades made by their traders to their liquidity providers.

3. Is any of it real?

Unlike in the exchange of stocks and bonds, in foreign exchange, not a single penny is actually exchanged for a cent. There is no physical moving of currencies – and the Forex market, while originally a way for large banks to trade currencies with one another, only actually writes currencies from one account to another in the name of multinational banking corporations about 20% of the time.

The other 80% of market trades occur in the name of speculation and individual profit, or to comment on recent geopolitical events by moving assets from one currency to another – or shorting one currency in order to be long in something with a growing value.

4. What currencies are traded most often?

While you can typically trade any currency, only seven currency pairs are considered most profitable, and the most commonly traded. These are, unquestionably, the kings of the Forex world:

EUR/USD USD/JPY GBP/USD USD/CHFThese are the major pairs. Below, however, are the commodity pairs also often traded:

AUD/USD USD/CAD NZD/USDWhile you can trade in any currency, from the Polish zloty to the Mexican peso, over 90% of all Forex trades are done in the above seven pairs, or any combination thereof.

With these basic questions answers, a proper Forex license and more, there will be much less doubt in the eyes of your traders – and they’ll know enough to get started and train their skills on your demo platform.

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