Start learning to trade on financial markets!
The most active financial market in the world is the foreign exchange market, or FS market. We’re dedicated to serving our customers with the best instruction, resources, platforms, and accounts so they can understand this market and trade Financial Services.
You’re in the perfect place if you don’t know where to begin when it comes to Financial Services.
You may learn everything there is to know about Financial Services trading, including what it is, how it operates, and how to get started.
What is Financial Services?
Foreign exchange, or Financial Services, is the process of converting one currency into another. This procedure may be carried out for a variety of objectives, such as business, tourism, and facilitating global trade.
Banks, companies, investment firms, hedge funds, and retail traders all use the Financial Services market, which is open 24 hours a day, five days a week, for currency buying and selling.
What is the Financial Services market?
The Financial Services market, which has grown from $5 trillion just a few years ago, is by far the biggest and most liquid financial market in the world. Its estimated average daily global turnover is US$6.5 trillion.
The fact that there is no central marketplace or exchange in a single location and that all trading takes place electronically across computer networks is a crucial aspect of the Financial Services market. An over-the-counter (OTC) market is what this is.
What is a Financial Services Financial Services Provider?
In order for retail traders to use online trading platforms and speculate on currencies and their price movements, an online Financial Services Financial Services Provider serves as an intermediary.
Individual traders can handle a sizable Financial Services account with a small initial deposit because of the leverage that most online Financial Services Provider provide. However, it’s critical to keep in mind that leveraged trading magnifies both gains and losses.
HEDGECENT provides a variety of trading accounts, each of which offers features and services catered to a client’s particular trading goals.
Visit our account page to find the account that’s best for you. If you’re new to Financial Services , you may start learning about the markets by risk-free trading on our sample account.
Why trade Financial Services?
For retail traders, Financial Services has many advantages.
Since the Financial Services market is not traded through a central exchange like a stock market, you can trade 24/7 in several sessions worldwide. Therefore, you can invest in volatility wherever it exemplifies itself. Moreover, high liquidity allows you to quickly and swiftly fulfill your requests.
Leveraged Financial Services trading enables you to start a position with a smaller initial investment than the total trade value. If you believe a Financial Services pair’s value will rise or fall, you can also go long (buy) or short (sell).
Numerous FS pairs are available in the endless opportunities provided by Financial Services trading. The extensive library of learning materials offered by HEDGECENT is a great place to start and sharpen your trading skills.
How does Financial Services work?
They are the biggest and most liquid, accessible from practically any country, open 24 hours a day from 10 p.m. GMT on Sunday to 10 p.m. GMT on Friday.
We’re beginning Part II of our tour, where we’ll go into great detail about Financial Services trading, how it functions, how it got started, and how traders may access it. But, first, we’ll explain some crucial ideas and go through the fundamentals in this chapter on how Financial Services works.
What is a currency pair?
Every day, governments, banks, businesses, and people require foreign money. That could be a company purchasing inventory from an international supplier, a bank hedging its exchange rate risk, or a person going on vacation and needing some spending money. These parties come together to purchase and sell currencies directly or through middlemen like Financial Services Provider ; this produces the market and the price you see on your trading screen.
It is consistently quoted in pairs.
Exchange rates are always given in pairs since one currency is bought and one is sold. Not simply a single currency is a concern while trading the Financial Services markets; we also pay attention to currency pairs. Let’s look at the current exchange rate between the Euro and the US Dollar, or EUR/USD.
That shows us that at the moment, you can sell 1 euro and buy roughly this many dollars. You may also sell this many dollars in order to purchase one Euro.
Base currency and quote currency
A currency pair’s price is always quoted using the same format: the base currency, which is always worth 1, is the first currency in the pair, and the quote currency, which is the second, indicates how much of the quote currency will buy one unit of the base currency.
Major, minor, and exotic currency pairs
Theoretically, you should be able to exchange any currency for any other globally. You will, however, only be able to access those that your Financial Services Financial Services Provider offers.
These six currency combinations make up more than 80% of all Financial Services trades. The significant currency pairs are:
EUR/USD – Euros/US dollar
USD/JPY – US dollar/Japanese yen
GBP/USD – British pound/US dollar
USD/CHF – US dollar/Swiss franc
AUD/USD – Australian dollar/US dollar
USD/CAD – US dollar/Canadian dollar
Minor currency pairs, often known as crosses, are less liquid and do not include the US dollar, but they do include a major currency:
GBP/TRY – British pound/Swiss franc
SGD/JPY – Singapore dollar/Japanese yen
EUR/NZD – Euro/New Zealand dollar
GBP/JPY – British pound/Japanese yen
CHF/JPY – Swiss franc/Japanese yen
Exotic currency pairs
One major currency is typically paired with a currency from a developing or smaller country to form an exotic currency pair:
CHF/HUF – Euro/Hungarian forint
GBP/CZK – British pound/Czech koruna
EUR/TRY – US Dollar/Turkish Lira
JPY/NOK – Japanese yen/Norwegian krone
NZD/SGD – Hungarian forint/Singapore dollar
The fundamentals of trading currency pairs
The base currency, which always comes first in a Financial Services pair and is quoted on the left, is the unit of exchange. This money, which is always worth one, can be purchased or sold in exchange for the quote currency. According to the aforementioned example, a trader will need 1.1918 USD to purchase 1 EUR. A trader might also sell 1 EUR for 1.1916 USD.
The price at which a trader is willing to sell a currency is known as the bid price. This price is frequently displayed in red to the left of the quote. Since it is a live market, the bid price is provided in real-time and is updated often.
The quote currency, which is always on the right, is the second currency in a currency pair. For instance, in the EUR/USD exchange rate, the quote currency, USD, indicates how many units of the quotation currency will be exchanged for one unit of the base currency.
The ask price, often known as the lowest price a seller will accept, is the price at which a trader is willing to buy a particular currency. Typically, this is blue and to the right. Since it is a live market, the ask price is provided in real time and is continually changing.
Understanding Financial Services spreads and pip
You’ll notice as a Financial Services trader that the bid price is consistently higher than the ask price. The spread is the distinction between these two prices. It is hence the expense associated with trading. It costs less when the spread is narrower. Conversely, the spread is more expensive the broader it is.
When trading foreign exchange, you need the market price to move in your favor, either rising above the bid price if you are long or falling below the ask price if you are short.
A point in percentage, or pip for short, is a unit used in the foreign exchange market to describe how much a currency pair’s value has changed. It is the slightest change in the price of a currency that is comparable to a “point” of movement.
There is a standard size for contracts for currency pair trading, known as lots. There are 100,000 units of the basic currency in a typical batch.
For instance, if you purchased €100,000 and sold $112,931, if you decided to go long 1 lot of EUR/USD at the ask price of $1.12931.
Retail Financial Services Provider use lesser contract sizes because not everyone wants exposure to 100,000 units of a currency:
• 100,000 units of the base currency make up a standard lot.
• 10,000 units of the base currency make up a mini lot.
• 1,000 units of the base currency make up a micro lot.
• 100 units of the base currency make up a nano lot.
Long position vs. short position
A trader with a long position has purchased a currency hoping its value will increase. The long position is said to be “closed,” and the trade is said to be finished whenever the trader sells that currency back to the market (hopefully for more money than they bought for it).
To start a long position on the Euro, you would pay USD 1.1918 for 1 euro. After that, you will hang onto your investment in anticipation that it will improve in value before returning it to the market at a profit.
A trader who sells a currency intending to buy it back later at a lower price is said to be in a short position. Once the trader buys back the asset, a short position is considered “closed” (ideally for less than they sold it for).
In this scenario, you would sell 1 Euro for USD 1.1916 and retain a short position if you believed the Euro would weaken versus the Dollar. You intend to buy back the Euro at a lesser price as you anticipate its depreciation.
The basics of Financial Services trading for beginners
Fundamental analysis and technical analysis are the two primary types of analysis used by traders to forecast market movements and open live positions in the Financial Services markets.
To choose a trading style that suits their personality, Financial Services traders often employ one or a combination of these factors.
The “why” of this examination is why a Financial Services market responds the way it does. Numerous elements, including a nation’s economic power, political and social dynamics, and market mood, have an impact on Financial Services and currencies.
The most significant markers of fundamental analysis
News and economic information
Banks and investors seek out strong economies to invest in with the hope that their capital will increase.
That is due to the fact that the currency of that nation will be in demand as the economy’s outlook favors increased investment. Therefore, any news and economic reports that support this will prompt traders to desire to purchase that nation’s currency.
Government Policy and the Central Bank
Monetary policy is decided by central banks, which means they have power over variables like the money supply and interest rates. As a result, the methods and types of policies employed will eventually have an impact on the supply and demand of respective currencies. In addition, exchange rates may also be impacted by a government’s use of fiscal policy to stimulate or depress the economy through spending or taxes.
Technical analysts look at price patterns and trends in the Financial Services market. The trader can use these swings to spot hints about supply and demand levels.
Technical analysis aims to decipher patterns in charts so you can determine the best moment and price to enter and exit the market.
With a vertical line, the chart shows the high-to-low range together with the opening and closing prices. The ‘body,’ which includes the opening and closing values in bar charts, is different from the candle’s ‘wicks,’ which display the high and low.
The currency pair closed lower than it opened if the candlestick is filled. On the other hand, the closing price is more than the initial price if the candlestick is hollow.
The opening and closing prices and the high and low for that time period are displayed in a bar graph. The highest price paid is shown at the top of the bar, and the lowest exchanged price is shown at the bottom.
The horizontal marks on the sides denote the opening (left) and closing prices, and the entire bar shows the currency pair’s whole trading range (right).
A line chart is the most basic of all charts and is typically used by novices, but a bar chart is frequently used to show the contraction and expansion of price ranges. It merely displays a line that has been drawn between two closing prices.
When connected, it is easy to spot a currency pair’s price movement over a given time period and find currency patterns.
What affects the FS market?
Now that we’ve understood some of the principles of currency trading, what truly makes a currency pair’s price move? What we are doing as Financial Services traders are assessing the link between supply and demand. The price of a specific currency will typically rise, and vice versa if the demand for that currency rises or if the economy’s supply of that currency falls for any reason. Any student of economics will be familiar with these illustrations: The following factors may have an impact on a currency’s level of demand:
• short-term (interest rates, volatility, market mood) (interest rates, volatility, market sentiment)
• medium-term (geopolitical risks, economic growth, employment situation, fiscal policy)
• long-term (terms of trade, purchasing power parity)
Start trading with HEDGECENT!
You start trading with HEDGECENT because you can place buy and sell orders on our trading platforms.
Always go with a registered, regulated Financial Services Provider that has a minimum of five years of demonstrable experience. These Financial Services Provider will provide you piece of mind because they always put your money’s security first. You can start trading Financial Services once you’ve opened an active account, but you’ll need to make a deposit to cover the costs of your trades. A margin account is used in this situation to purchase and sell currencies using financial derivatives like .
It’s crucial to keep in mind that learning to trade takes time for beginners. The markets require time to study, and there is a whole new terminology to pick up. HEDGECENT provides a multitude of resources to learn Financial Services trading as a result. For instance, using our Demo account is a fantastic method to test out various trading tactics with virtual money without any risk!
When you’re ready to transition to the actual trading, we also offer a wide selection of trading platforms and accounts to fit your needs.