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Understanding Foreign Currency Trading

Foreign currency trading involves trading of currencies in the foreign exchange market. Also known as Forex, FX or currency market, foreign exchange market is a global over-the-counter (OTC) or a decentralized market for foreign currency trading.

In short, it is nothing but trading of currency across two or more countries to derive a common value of the exchange. The brokers involved in the trading pre-determine the pairs. These brokers may or may not offer a match for the pair that you wish to trade. For most people, the main purpose of foreign currency trading is to make money.

For example, the EUR (European Dollar)- USD(US Dollar) is the most popular pair that is widely traded.

A pair consists of the ‘base’ and a ‘counter’. Here, EUR is the ‘base’ and USD is the ‘counter’ currency. Whenever the Euro gains more value in dollars, the pair’s value increases and it decreases when there is a drop is Euro’s value in dollars.

Trading is done through an intermediary known as Forex brokerage. Brokers then take on your trade and put it on the market. As the foreign exchange is not done through a centralized market, the Forex broker rates may vary slightly and not be the same at the same time. The brokers deal with a network of banks and carry out the trading within fractions of a second as soon as the orders are placed.

Retail traders make money on the changes in the values of the currencies that happen over time.

Forex market is driven by news, the release of macroeconomic data, geopolitical developments, other developments, etc and runs 24/7. Although foreign currency trading offers plenty of trading opportunities, it can be challenging to protect an individual trader from financial irregularities. Thus, with the help of an established framework, regulations were introduced that makes sure that forex brokers comply with the regulations and help protect an individual trader from loss and offer controlled risk exposure.

According to government regulation, all forex brokers in the country have to register themselves with the National Futures Association (NFA). This self-regulating governing body provides the necessary framework that not only protects the market participants but also ensures that they follow integrity, transparency and abide by the regulatory responsibilities. You can verify whether the brokerage firms comply with the necessary regulations and approval on the NFA’s online verification system known as Background Affiliation Status Information Center (BASIC).

Here’s a list of top forex brokers regulated in the country. Please note that the list does not claim any particular ranking or order. It is recommended that you do your own research or consult an expert before deciding to go ahead with foreign currency trading.

FOREX.com

Owned by GAIN Capital Holdings, INC (NYSE-listed), it offers several salient features such as timely trade executions, tight Forex spreads, a mobile trading platform, and several other technical research indicators in 29 different languages. It also offers integration across MetaTrader 4 or FOREXTrader PRO platforms.

TradeKing Forex (Zecco)

Zecco offers trading applications that are compatible across tablets and smart-phones. Additionally, it offers dynamic trader network, tight spreads of 1-2 pips, and multiple Forex trading platforms that include streaming news, research, and analysis tools. Zecco has now been taken over by TradeKing.

ATC BROKERS

A popular regulated broker in the country, it offers no dealing desk, Scalping, STP Execution, Multiple Brackets Order. Apart from this, it also offers other risk management tools like custom trailing stop-loss and breakeven capability.

OANDA

Another popular broker in the country, OANDA offers competitive spreads with no commissions and deep market liquidity. Also, along with its OANDA Marketplace, it offers numerous features for Forex traders such as advanced analytical tools, Forex tools, Forex news products, training videos, and MT4 plugins.

TradersChoiceFX

For 20 years it has been known to be a full-service introducing brokerage firm. It offers the rebate program for every Forex trade that one makes by providing a cash bonus. The trading is then executed by their referring partners namely FOREX.com, FXCM, or CitiFX Pro.

Thinkorswim

It offers to trade in over 100 global currency pairs. It TD Ameritrade, Inc and is a very popular US-regulated Forex broker.

Interactive Brokers

Interactive Brokers has a global presence and is also a well known Forex broker in the country. It c aims to have trading tutorials, global offerings, high-end trading technology, low trading costs with high-level execution and risk management tools.

In addition to this list, there are several other regulated brokerage firms that you can explore for foreign currency trading. Although Forex trading is a great way to make money, it is similar to any other forms of investment. You will need to have a lot of patience and thorough knowledge about the trading. If you achieve it then no one can stop you from making that extra money.

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