CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.2% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Trading instruments
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5
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What is so attractive about trading Forex?

 Introduction

The ability for absolutely everybody from every walk of life in almost every nation in the world to be able to trade the global markets was a pipe dream just a few decades ago.

Until the dawn of retail Forex trading via electronic platforms such as that provided by OVALX (editor's note: or ETXCapital depending on when this is being published) was reserved for professional traders and interbank dealing desks, however over recent years there have been huge developments in the accessibility to highly liquid global markets for retail traders.

Why is Forex trading so popular?

The popularity of foreign currency trading, known often by the acronym Forex trading, gained ground in the early to mid-1990s when proprietary platforms aimed at giving accessibility to absolutely anyone over the age of 18, anywhere in the world, access to the foreign currency markets.

The forex market is attractive to many traders because of its continual availability. It is possible to trade the forex market 24 hours per day, 6 days per week.

The only day in which there is no liquidity in the Forex market is on Sundays. Apart from that it is a highly liquid, fast-paced market which often has a far higher level of engagement and immediacy than some other markets which rely on central counter parties such as exchanges for execution or are based on underlying assets such as commodities where physical delivery is required for settlement.

Being able to open and close positions in a lively, truly global, and instant market is very attractive to a large number of traders around the world.

Access to markets:

Every day, over $6.6 trillion is traded in the global forex markets, an amount that is continually increasing which makes the market an infinitely exciting choice for retail traders who can participate in one of the world’s most liquid and highly capitalised marketplaces.

Additionally, Forex trading is conducted on a leveraged basis, meaning that when a trader places a trade using margin capital which is deposited by the trader into a trading account, the value of the position is magnified by the ratio of leverage

when it is traded in the forex markets.

For example, if leverage is set at a ratio of 1:30, and a trader allocates £100 of capital to make a forex trade, the value of the trade in the live market would be £3,000 meaning that a trader could open a position worth £3,000 with just £100 of capital invested.

At OVALX (or ETX) the minimum margin is of 0.35% and for professional traders and 3.33% for retail traders.This means that leverage is capped at a ratio of 1:30 for retail traders.

Low cost and low entry barriers

Unlike exchange trading which comes with very expensive annual membership fees and clearing fees, Forex trading on an over-the-counter (OTC) basis with a retail broker is easily accessible to the vast majority of individuals wishing to trade the financial markets.

The costs of operating a Forex trading account are very minimal, with the vast majority of traders not having to pay brokerage fees or commissions.

In most cases, there are no commissions at all on spread betting, however commissions do apply to Contract For Difference (CFD) products. Many forex brokerages make their revenues from the spread between the currencies being traded.

Risk

As with all kinds of trading across all markets and instruments, there is a risk involved, however with forex trading, despite being able to participate in a highly liquid market with leverage, negative balance protection ensures that traders do not lose more money than they deposit into their trading account.

Due to the majority of trades being executed via an internal dealing desk within the forex brokerage, trading activity is risk managed in a very prudent manner in which risk managers are able to act in the best interest of a trader by preventing exposure to negative balances is a major benefit.

Summary


Overall, forex trading is a quick, cost-effective way for most people with either modest or considerable means, regardless of location, to be able to participate in the global financial markets.

It is an exciting, highly liquid market which is operated on an over the counter (OTC) basis which means that there are low entry barriers and there is no need for exchange membership or fee-heavy execution and settlement costs associated with some other asset classes or trading methods.

OVALX offers over 60 currency pairs including all of the majors and exotics, and minor currencies which make up the majority of the currencies traded in the markets worldwide.

For a full list of currencies available, click here. (add link to asset class list).

Please note that the presented content refers to the Oval group which contains two legal entities: Monecor (London) Limited authorised and regulated by the UK Financial Conduct Authority (FCA) with Financial Services register number 124721. Monecor (Europe) Limited authorised and licensed under the Cyprus Securities and Exchange Commission (‘CySEC’) with license number 096/08.