Spread Betting Forex

The foreign exchange market, also known as forex, currency trading, spot forex and FX; can offer attractive opportunities to spread traders, even during turbulent market conditions. If you are interesting in forex trading, you can actually trade forex through financial spread betting. Most spread betting providers offer trading on a wide range of major and even exotic currency pairs. The added advantage is that with your same spread betting account you can trade a wide range of other financial markets that are often impacted by fluctuations in the forex market.

There are many currencies around the world but only eight currencies (referred to as the majors) are actively traded and make up about 90% of all global trade transactions. The USA dollar (USD) is naturally the most traded. The other majors are the euro, British pound, Japanese yen and Swiss franc. The Canadian dollar, Australian dollar and New Zealand dollar are also included and these are sometimes known as the ‘commodity currencies’ since their price movements are very much correlated to international commodity prices. Currencies are always traded in pairs and spread trading providers can quote as many as 50 major, minor and exotic currency pairs. For the more commonly traded currency pairings, such as Euro-Dollar or Pound-Dollar, spreads are very tight. Of course if you trade less liquid pairs such as USD/SEK (USD/Swedish Krona), the spread is much wider.

The main problem with forex trading is that there are a whole lot of variables to consider and the foreign exchange markets can be very volatile. Many traders get into forex trading because of the high leverage that is normally possible – most brokers offer 1:100 leverage, some even go as high as 1:400. Because of this, anyone with 500 quid could in theory open an account and trade with currencies worth 50,000 pounds. Although this would be quite dangerous of course yet forex trading appeals to the masses who don’t have a lot of money to start with. As a consequence, 90% of Forex traders fail due to overleverage/underfunded accounts.

It is worth noting that certain spread trading companies charge higher spreads than other brokers… while some offer guaranteed stops whereby maximum you’ll stand to lose lose (should the market move against you) is guaranteed to be the amount you put as your stop-loss even if market opens much lower.

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