Benefits of forex trading

Why trade forex?

Many traders are drawn to forex for the market’s volatility and extended trading hours compared to other markets like stocks or indices. Trading forex enables you to:

1. Seize forex volatility
2. Trade around the clock
3. Go long or short
4. Capitalise on high liquidity
5. Make your money go further with leverage
6. Choose from a wide range of currency pairs
7. Hedge with forex
8. Access tools to help you trade

Seize forex volatility

The high volume of currency trades each day translates into billions of dollars every minute, which makes the price movements of some currencies extremely volatile. You can potentially reap large profits by taking a position on price movements in either direction. But, volatility is a double-edged sword – the market can quickly turn against you, so it’s important to limit your exposure with risk-management tools.

Trade around the clock

The forex market is open 24 hours a day, five days a week. With us, you can trade forex from 5pm Saturday to 7am the next Saturday (AEST)*. These long trading hours are made possible because forex transactions are completed over the counter (OTC), rather than through a central exchange.

And, because forex is a truly global market you can always take advantage of different active session’s forex trading hours. That said, it’s important to remember that the forex market’s opening hours will vary in March, April, October and November as countries shift to daylight savings on different days.

*Our trading hours are based on UK hours, and are converted to AU time zones. This means that the times listed are affected by both UK and AU clock changes in the year, and will be adjusted by +/- 1 hour accordingly.

Go long or short

With us, you’ll trade forex with CFDs. CFDs are financial derivatives, meaning you can go long or short.

Going long means that you expect the price of a forex pair to rise, while going short means that you expect the price to fall. You’d go long if you think the base currency will strengthen against the quote currency, meaning you expect the pair’s price to rise. Alternatively, you’d go short if you think that the base will weaken against the quote, meaning that you expect the pair’s price will fall.

For reference, the base currency is always on the left of a currency pair and the quote currency is always on the right. The price for a forex pair states how many of the quote currency you would have to sell in order to buy a single unit of the base.

It’s important to note that CFDs are leveraged, which we’ll cover further below.

Capitalise on high liquidity

Forex is the most liquid market in the world because there is a large number of buyers and sellers looking to make a trade at any given time. Each day, over $6 trillion dollars of currency is converted by individuals, companies and banks, which is roughly three times the Australian gross domestic product for 2022 ($1.7 trillion).

Forex’s high liquidity means that transactions can be completed quickly and easily, and that spreads are often very tight – meaning the underlying market price won’t have to make a significant positive move in order for your trade to be profitable.

Make your money go further with leverage

With us, you can trade forex via CFDs. CFD products are leveraged, which can make your money go further. Leverage in forex enables you to open a position on the currency market by paying just a small proportion of the full value of the position up front.

For example, opening a trade on EUR/GBP might require a deposit worth just 3.33% of the total value of the position. This initial deposit is referred to as margin.

The profit or loss you make will reflect the full value of the position at the point it is closed, so trading on margin offers an opportunity to make large profits from a relatively small investment. But, it can also amplify any losses, which could exceed your initial deposit. So, it’s important to consider the total value of your leveraged forex trades before you open a position.

We have a range of risk-management tools to help you control your exposure to risk, including stop losses, trailing stops, guaranteed stops and price alerts.

Choose from a wide range of currency pairs

Forex trading gives you the opportunity to trade a wide variety of currency pairs, taking a position on global events and the relative strength of major and minor economies.

Our offering lets you trade over 80 currency pairs including:

• Major currency pairs like GBP/USD, EUR/USD, and USD/JPY
• Minor pairs like USD/ZAR, SGB/JPY, CAD/CHF
• Emerging currency pairs like USD/CNH, EUR/RUB and AUD/CNH
• Exotic pairs like EUR/CZK, TRY/JPY, USD/MXN

These pairs are all available to trade on our award-winning trading platform and app¹ when you create an account with us.

Hedge with forex

Hedging is a technique that can be used to reduce the risk of unwanted moves in the forex market by opening multiple strategic positions. Although volatility is part of what makes forex so exciting, hedging can be a good way of mitigating or limiting your loss to a known amount.

There are a variety of strategies you can use to hedge forex, but one of the most common is hedging with correlated currencies. By opening opposing positions on forex pairs that are positively correlated – like GBP/USD and EUR/USD – you can limit your downside risk. For example, a loss on a short EUR/USD position could be mitigated by a long position on GBP/USD.

Alternatively, you could use forex to hedge against loss in other markets, such as commodities. As an example, USD/CAD generally has an inverse relationship with crude oil. So, a long USD/CAD position can be used as a hedge against falling oil prices.

Access tools to help you trade

We have a range of in-platform tools that can help you trade. These include our price alerts and trading signals, to a whole variety of technical indicators that you can overlay on any price chart with the click of a button. Plus, when you trade on our platform, you’ll get integrated news feeds from our own in-house analysis team as well as social media.

Aside from this, we also offer educational tools like IG Academy, which is loaded with clear and engaging forex trading courses to help you get comfortable with the markets and the nuances to trading.

If you’re still deciding whether forex trading is for you, why not try our free demo account? You’ll get access to $20,000 in virtual funds, so you can try forex trading and build your confidence without being exposed to the risks of the live markets.