Open Live accountOpen Demo accountOnline Chat Login
EN

EN

CN

What is FOREX & CFD
What is FOREX & CFDIntroduction to TradingRisk of TradingUnderstanding the Financial marketsHow to open a trading accountRisk Management

What is FOREX

Foreign exchange transactions are usually in the OTC market (over-the-counter market) in accordance with the exchange rate agreed to exchange one currency for another currency. The foreign exchange market is the most active market in the world, with an average daily trading volume of more than 6 trillion US dollars.

FOREX trading refers to the act of speculatively buying and selling a currency concurrently.

Unlike most financial markets, the OTC foreign exchange market does not have a specific location or central exchange. It can trade 24 hours a day through a global network of companies, banks and individuals.

Foreign exchange is the most liquid market in the world, which means that spreads in the foreign exchange market tend to tighten for most of the day, and traders have certain security knowledge and can execute positions and instructions at any time. The average daily transaction volume of governments, central banks, financial institutions, enterprises and professional retail accounts is as high as 6 trillion US dollars. Foreign exchange is the world's largest financial market. In contrast, the daily trading volume of the New York Stock Exchange is approximately $50 billion.

24 Hours FOREX Trading

The price can be obtained anytime during the day, which helps to minimize the price gap (there will be no trading between the two prices) and that traders can open positions at any time, although in fact, at certain times, the trading volume Lower than the average daily trading volume, which leads to increased market spreads.

Leverage

Foreign exchange trading is a margin product, which means that you only need to deposit a small part of the total value of the position to conduct foreign exchange transactions. This means that compared with traditional transactions, profits or losses are significantly higher than initial capital expenditures.

Pricing

All foreign exchanges are quoted in one currency and another. Each currency pair has a "Base Currency” and a "Quoted Currency". The Base Currency is on the left side of the currency pair, and the Quoted Currency is on the right side of the currency pair. For example, in "EUR/USD", the Euro is the “Base Currency” and the U.S. dollar is the “Quoted Currency”. Changes in foreign exchange prices are triggered by currencies, whether they appreciate or depreciate. If the price of EUR/USD in the example falls, this will indicate an appreciation of the Quoted Currency (USD) and a depreciation of the Base currency (EUR).

In foreign exchange pricing, if you believe that the base currency will appreciate relative to the quoted currency, then bid the currency pair. Conversely, if it is believed that the base currency will depreciate relative to the quoted currency, then sell the currency pair. Examples of major currency pairs are as follows:

EUR/USD (the value of 1 euro in U.S. dollars) USD/CHF (the value of 1 U.S. dollar in Swiss francs)

Price Interest Point (Pip)

Pip refers to price movement of FOREX rate. Most of our currency groups are quoted in five decimal places, and the change in price from the fourth decimal place is called a “point”. For example, if the price of the EUR/USD pair changes from 1.41800 to 1.41920, it means an increase of 12 pips (92-80=12). Spread is the difference between the buying and selling price of the currency pair.

Another example is the EUR/USD trading price is 1.41800/41806 (in this case, the spread is 0.6pips or 0.00006). There is an exception for yen pairs, which quotes only two digits after the decimal point. The USD/JPY trading price is 76.41/76.44, with a spread of 3 pips.

FOREX prices are affected by different factors from international trade or investment flows to economic or political conditions. This is why FOREX trading is so interesting and exciting. High market liquidity means that prices can respond promptly to changes in news and short-term events, creating numerous trading opportunities for FOREX retail traders.

What is CFD

A CFD is a derivative trading tool that provides trading opportunities for a wide range of financial market price movements, including Forex, indices and commodities. You can trade all financial products in one account.

  • Principles of CFD trading

    You don’t need to take action for underlying assets when conducting a CFD transaction (E.g.: specific stocks, currency pairs, or commodities). AUGS provides CFDs on markets around the world. You can bid or ask for certain units of specific products or financial products depending on your decision. We have a wide variety of products for selection including stocks, bonds, currency pairs, commodity indices, and stock indices such as the UK 100 index, which aggregates the price of all stocks in the FTSE100 index.

    If the price moves in your favor you can greatly increase your profits. However, if the price moves against you it can lead to substantial losses. Please keep in mind that losses can exceed your deposit.

  • CFD Leverage & Margin

    CFD is a leveraged product, which means that you only need to deposit a small percentage of the total transaction amount to open a position, that is, "margin trading" (or "margin requirement"). Margin trading will amplify profits and losses at the same time. The profit or loss is based on the value of the position, which means that your loss could exceed your deposit.