Forex trading

A currency trade is the simultaneous buying of 1 currency and selling of another 1. D currency combination used in the trade is called a cross .The most commonly traded currencies are the so-called “majors” – EURUSD , USDJPY , USDCHF N GBPUSD . The most important forex market is the spot market as it has the largest volume. D market is called the spot market because trades are settled immediately, or “on the spot”. In practice this means two banking days. Forward Outright For forward outright, settlement on d value date selected in the trade means dat even though the trade itself is carried out immediately, der is a small interest rate calculation left. The interest rate differential doesn't usually affect trade considerations unless you plan on holding a position with a large differential for a long period of time. The interest rate differential varies according to the cross you are trading. On the USDCHF , for example, the interest rate differential is quite small, whereas the differential on NOKJPY is large. This is because if you trade e.g. NOKJPY, you get almost 7% (annual) interest in Norway and close to 0 percent in Japan. So, if you borrow money in Japan, to finance the trade and buying NOK, you have a positive interest rate differential. This differential has to be calculated N added to your account. You can have both a positive and a negative interest rate differential, so it may work for or against you when you make a trade Why trade Forex? 1) 24 hour trading 1 of the major advantages of trading forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). This gives you a unique opportunity to react instantly to breaking news that is affecting the markets. 2) Superior liquidity The forex market is so liquid that there are always buyers and sellers to trade with. The liquidity of this market, especially that of the major currencies, helps ensure price stability and narrow spreads. The liquidity comes mainly from banks that provide liquidity to investors, companies, institutions and other currency market players. 3) No commissions The fact that forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis. Trading the “majors” is also cheaper than trading other cross because of the high level of liquidity. For more information on the trading conditions of Saxo Bank, go to the Account Summary on your SaxoTrader and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary. 4) 100:1 Leverage Leverage (gearing) enables you to hold a position worth up to 100 times more than your margin deposit. For example, a USD 10,000 deposit can command positions of up to USD 1,000,000 through leverage. You can leverage the first USD 25,000 of your investment up to 100 times and additional collateral up to 50 times.