Currencies are quoted in pairs, for example, Euro/US dollar, and investors can speculate on changes in the relative prices between the currencies. When one currency in the pair increases in value, it strengthens against the other. Currency trading is a popular way to trade on financial markets as it is a truly 24-hour market.
With currency pairs, the first currency is quite often referred to as the base currency and the second currency is referred to as the quote currency. In any price quote, the figure tells you how much you would receive of the quote currency for one unit of the base currency.
Margin trading allows investors to buy and sell assets that have a greater value than the capital in their account. Forex trading is typically executed on margin accounts, and the industry practice is to trade on relatively small margin amounts since currency exchange rate fluctuations tend to be less than one or two percent on any given day.
Margin trading does involve a certain amount of risk. Since a position is being held that exceeds the actual value of the account, a trader could incur substantial losses if the market moves against his position. Thus, margin trading requires close monitoring of margin utilization, i.e. the amount of collateral being used to hold margined positions.
If margin utilization exceeds collateral available for margin trading, positions must be closed, reduced, or additional funds must be posted to cover the position.
We at Gobal Commodities House offer trading in all major and cross currencies such as: