Forex

Forex trading involves the conversion of one currency to another. When fluctuations occur in the forex market, traders can profit from price differences between currencies. Currency fluctuations are influenced by factors such as political events, wars, disasters, epidemics, the global economy, monetary policy, interest rates, and inflation. These factors impact the demand and supply of currencies, leading to exchange rate fluctuations. The daily trading volume of the forex market reaches 7.5 trillion USD, making it impossible for any institution or individual to manipulate the market. This provides traders with the opportunity to trade anytime and anywhere.

The forex market includes major currency pairs. Among them, EURUSD, GBPUSD, USDJPY, USDCAD, USDCHF, AUDUSD, and NZDUSD are the seven major currency pairs worldwide. When trading forex, orders for these currency pairs are placed in the interbank market, which consists of banks and non-bank institutions. Typically, there's a difference between the 'buy' and 'sell' prices of currency pairs, known as the 'spread,' which depends on market liquidity provided by banks and non-bank institutions. Generally, higher market liquidity leads to easier order execution and more favourable quotes. EBC offers traders 36 currency pairs to trade with minimised spreads. By participating in forex trading through EBC's institutional-level liquidity pool, you can directly connect to the interbank market, composed of over 25 top-tier institutions, enjoying institutional-level order depth and highly competitive trading costs.

Unlike stocks and commodities, which are traded on centralised exchanges, currency pair trading takes place across multiple networks of banks, traders, and brokers globally. Therefore, it is not limited to specific trading sessions, allowing traders to trade 24 hours a day, 5 days a week, at more flexible times.

Leverage in forex trading determines the utilisation of your funds. Generally, higher leverage leads to greater capital efficiency. For example, a standard EURUSD contract is worth 100,000 USD. Without leverage, you would need to pay the full amount, investing 100,000 USD. With 500x leverage, you only need to invest 200 USD, effectively multiplying your capital 500 times. Similarly, 100x leverage requires 1,000 USD, and 200x leverage requires 500 USD. However, higher leverage also magnifies potential losses. We recommend a 30%-50% exposure during trading. For example, with a 1,000 USD account, invest between 300 USD and 500 USD, reserving the rest as a risk buffer to handle market volatility. For beginners, a 10%-30% exposure is recommended. Currently, considering risk-return balance and MiFID II regulatory requirements, EBC offers a maximum leverage of 500x.

The pip value in forex trading refers to the smallest price movement in currency fluctuations. We often say 'how many pips it has moved' to refer to this price change. For most currency pairs, the pip value corresponds to the fourth decimal point, which is 0.0001. For example, if EURUSD rises from 1.0558 to 1.0559, we say EURUSD has moved one pip. Typically, for one standard lot of such currency pairs, each one-pip movement results in a 10 USD gain. For other currency pairs, such as USDJPY, the pip value corresponds to the second decimal point. If USDJPY rises from 149.01 to 149.02, we say USDJPY has moved one pip.

Forex trading involves buying one currency in a currency pair while selling the other. For example, EURUSD represents buying euros and selling US dollars, while USDJPY represents buying US dollars and selling Japanese yen. Generally, we buy the currency in a currency pair that is appreciating and sell the currency that is depreciating. For instance, if you are bullish on the euro and bearish on the US dollar, you would buy EURUSD. Conversely, if you are bullish on the US dollar and bearish on the euro, you would sell EURUSD. The movement of a currency pair is influenced by various factors, such as monetary policies, economic data, and inflation. Typically, when a central bank raises interest rates and reduces the money supply, the corresponding currency strengthens. If a country's economic data is positive, markets often anticipate rising inflation and interest rate hikes, which can drive the currency higher.

To ensure the safety of funds, it is crucial to choose a reputable and strictly regulated broker before engaging in trading. Such brokers typically enforce stringent KYC (Know Your Customer) procedures, requiring users to provide audit reports from professional institutions to verify their trading experience and risk tolerance. This information is subsequently reported to the relevant regulatory authorities. Additionally, traders can verify a broker’s full licence and authorisation details directly through regulatory agencies. In accordance with the Financial Conduct Authority (FCA) client asset rules (CASS), accounts opened with EBC under FCA regulation are protected by the UK's Financial Services Compensation Scheme (FSCS), providing coverage of up to 85,000 GBP. Funds are also independently held in custody at Barclays Bank in the UK.