It is the term used to describe the initial deposit you put up to open and maintain a leveraged position. When you are trading forex with margin, remember that your margin requirement will change depending on your broker, and how large your trade size is. Margin is usually expressed as a percentage of the full position. Pips are the units used to measure movement in a forex pair.

A forex pip is usually equivalent to a one-digit movement in the fourth decimal place of a currency pair. The decimal places shown after the pip are called fractional pips, or sometimes pipettes. The exception to this rule is when the quote currency is listed in much smaller denominations, with the most notable example being the Japanese yen.

Here, a movement in the second decimal place constitutes a single pip. Instead, there are several national trading bodies around the world who supervise domestic forex trading, as well as other markets, to ensure that all forex providers adhere to certain standards. Gaps do occur in the forex market, but they are significantly less common than in other markets because it is traded 24 hours a day, five days a week.

Who are the best South African Forex traders?

However, gapping can occur when economic data is released that comes as a surprise to markets, or when trading resumes after the weekend or a holiday. Although the forex market is closed to speculative trading over the weekend, the market is still open to central banks and related organisations. So, it is possible that the opening price on a Sunday evening will be different from the closing price on the previous Friday night — resulting in a gap.

The tax on forex positions does depend on which financial product you are using to trade the markets. When you trade via a forex broker or through CFDs, any gains to your forex positions are taxed as ordinary income. However, your losses are also considered as ordinary capital losses, which means that you can use them to offset any other tax. Be aware of the risks associated with forex trading and understand how IG supports you in managing them.

Clients: Help and support. Professional clients can lose more than they deposit. All trading involves risk. South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance. Such trades are not on exchange. The information on this site is not directed at residents of the United States or Belgium or any particular country outside South Africa and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

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Discover a range of other benefits of forex trading. How do currency markets work? What is a base and quote currency? To keep things ordered, most providers split pairs into the following categories: Major pairs. Less frequently traded, these often feature major currencies against each other instead of the US dollar. A major currency against one from a small or emerging economy.

Top 10 Forex traders in South Africa and what their secrets to success are

Pairs classified by region — such as Scandinavia or Australasia. What moves the forex market? News reports Commercial banks and other investors tend to want to put their capital into economies that have a strong outlook. Market sentiment Market sentiment, which is often in reaction to the news, can also play a major role in driving currency prices. How does forex trading work? Learn more about how to trade forex. What is the spread in forex trading? What is a lot in forex? What is leverage in forex? Learn more about how leverage works. Learn how to manage your risk.

What is margin in forex? What is a pip in forex? A Financial market that trades in high volumes will generally offer high liquidity. High Liquidity , in turn, leads to tighter spreads and lower transaction costs. Major Forex Currency pairs will typically carry extremely low spreads and transaction costs in comparison to stocks making this is a major advantage of trading in the forex market. Forex is an over-the-counter or OTC market which means it is not transacted over a traditional exchange.

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Forex trading is facilitated through the interbank market which allows trading to continue across the globe in different countries, during different business hours and trading sessions. Forex traders will have access to trading virtually 24 hours a day, 5 days a week. On the other hand, Major stock indices trade at different times and are affected by different variables. Most regulated forex brokers will charge little to no commission, instead of making their margin on spreads. When trading stocks or a futures contract, on the other hand, traders will have to pay the spread along with a commission to their broker.

There are eight major currencies available for Forex traders to focus on, whilst the stock markets offer thousands. With a smaller number of economies available to focus on traders will look for diverging and converging trends between the currencies in order to match up a forex pair to trade. Eight currencies are much easier to keep a grip on than thousands of stocks. Variables that effect the major currencies can easily be monitored using an economic calendar. Finding the right Forex broker can be a complicated task as there are hundreds of firms across the globe to choose from.

While most brokers may offer the same level of access and qualities in the foreign exchange market , the procedures and policies may differ dramatically. Each Forex broker will represent a different level in the industry. Some will represent a high level of expertise with direct access to the market while other brokers are seen as distant with very little connection on offer. The types of forex are crucial to understand before trading. Dealing Desk or DD brokers refer to market makers. Dealing desk brokers or market makers will typically provide investors with fixed spreads and elect to quote above or below real-time market prices at any given time.

Choosing to trade with a dealing desk is a wise choice for both beginner and expert traders who wish to avoid direct trading with liquidity providers. Dealing desk brokers customarily receive payment through spreads. No Dealing Desk forex brokers are firms that allow forex traders to have direct access to the interbank market. A reputable NDD broker will not require the re-quoting of prices and traders will have the chance to trade following any economic announcements without facing restrictions. Choosing an NDD broker will allow traders to use low and unfixed spreads and as the spreads are not fixed, there is a greater tendency for the spread value to increase notably when a rise in volatility takes place due to a noteworthy economic announcement.

In order to receive payment, NDD brokers may increase the spread or charge a commission on each forex trade. ECN brokers are firms that offer and display actual order book details typically feature processed orders plus the offered prices by different banks within the interbank market.