How to open an account with FBS?
- Go to FBS’s Official Website and click on “OPEN ACCOUNT” button;
- Register for FBS’s service and receive login information of your account;
- Log in to FBS’s client portal and start the operation.
Once you opened an account with FBS, you can make a deposit (your investment fund), download FBS MT4 or MT5 trading platforms, and start trading Forex and CFDs.
FBS is running various bonus promotions to welcome new traders to the broker.
Visit FBS’s Official Website today and check out the latest offers.
What is Forex trading?
Simply put, forex – also known as FX or currency exchange – is the exchange of one currency for another at an agreed price. It is a decentralized market where the currencies of the world are exchanged as in an OTC market, which means that the operations are fast, cheap, and are completed without the supervision of a supervisor.
You can trade Forex 24 hours day
Basically, forex trading is the action of speculating on the movement of exchange prices when buying one currency while simultaneously selling another. Currency values rise (appreciate) and fall (depreciate) against each other due to a number of economic, geopolitical, and technical factors.
The Forex is a globally operated market, open 24 hours a day, five days a week (Monday through Friday). It follows the sun around the earth, opening Monday morning in Wellington, New Zealand, before moving on to Asian markets in Tokyo and Singapore. Then it moves to London, before closing New York on Friday night.
Even when the market is closed from Friday to Sunday, something always happens that will wreak havoc on various currencies upon opening on Monday.
Access to the Forex market – the largest financial market
Forex is the most traded market, with an average business volume in excess of $ 5 billion a day. This means that currency prices are constantly fluctuating in value against each other, creating various trading opportunities for investors who take advantage of them.
It is rare for two different currencies to have identical values, and it is also rare for two currencies to remain at the same relative value for more than a short period of time.
You may not know it, but you have probably been in the FX market at least once in your life. Let’s say you are planning a vacation in the United States, and you need to change the money you are taking from euros to (EUR) to US dollars (USD).
On Monday, you find a currency exchange establishment and see that the exchange rate for EUR / USD is $ 1.45. This means that for every euro you change, you will get $ 1.45 in return. You spend € 100 to get $ 145.
However, you do the same trade a couple of weeks later and realize that the exchange rate for the EUR / USD is now $ 1.60. For your € 100, you now get $ 160 – $ 15 more – if you had known you would have waited for the rise of the euro against the dollar to change the money.
Every moment is your trading opportunity
Exchange rates in currencies fluctuate continuously due to various factors such as the economic power of a country. What forex traders seek is to take advantage of these fluctuations by speculating on whether prices will rise or fall.
All forex pairs are quoted in terms of one currency against another. Each currency pair has a “principal”, which is what the first currency is called, and a “counterpart”, which is what the second currency is called.
Each currency can either strengthen (appreciate) or weaken (depreciate). Since there are two currencies in each pair, we essentially speculate on four variables when it comes to forex trading.
If you think the value of one currency will rise again against another, you go long or “buy” that currency. If you think the value of one currency will decline against another, you go short or “sell” that currency.
So for example, if you believed that the USD would strengthen (appreciate) against the JPY, you would go long or buy the USD / JPY pair. You would also buy if you believed that the JPY would weaken (depreciate) against the USD. And also the reverse, if you thought that the JPY would strengthen against the USD, or that the USD would weaken against the JPY, you would sell or go short of USD / JPY.
For all these factors, the forex market offers you infinite possibilities every day, hour, even every minute.
What is CFD trading?
The term CFD stands for contracts for difference.
A contract for differences, as the name implies, provides a contract between two parties regarding the movement of the price of an asset.
There are several key characteristics of a CFD that make it a unique and exciting product:
- CFDs are a derivative product.
- CFDs are leveraged products.
- You can benefit from both their increases and their price drops
- We offer contracts for differences in nearly 1,500 global markets, including indices, stocks, currencies, commodities and ETFs.
We offer contracts for differences in nearly 1,500 global markets and multiple asset types, all with the ability to use leverage and go long or short, including:
- Foreign exchange
- Raw Materials
Profit from both rising and falling market prices
This means that the underlying asset does not actually belong to you – you only speculate on whether its price will go up or down .
Let’s take an example with stock investing. You would like to buy 10,000 shares of Barclays, and its price is 280 cents, which means that the total investment price would be € 28,000 – not including the commission or other fees that your broker will charge you for the transaction. In exchange for this, you receive a share certificate, the legal documentation that certifies your ownership of the shares. In other words, you have something physical to hold onto until you decide to sell them, preferably for a profit.
If you think the price of an asset is going to go up, you can go long or “buy”, and you will benefit from each price increase.
If you think the price of an asset is going to drop, you can go short or “sell”, and you will benefit from each drop in price. Of course, if the markets don’t move in the direction you expect, you will suffer losses.
So if, for example, you think Apple’s share price is going to fall, you can go short on the Apple share CFD, and your profits will rise in line with any drop in price below your opening level. .
However, should Apple’s share price rise, you would suffer a loss for each rise in price. How much you can win or lose will depend on the size of your position (lot size) and the size of the price movement in the market.
The ability to go long or short, coupled with the fact that CFDs are leveraged products, makes them one of the most flexible and popular ways to trade short-term movements in financial markets today.
Utilize a high leverage to earn more
This means that you gain more exposure in the market for a relatively small initial deposit. In other words, your return on investment is significantly higher than with other modes of operation.
Let’s go back to the Barclays example. Those 10,000 Barclays shares at 280 cents cost you € 28,000 and not including any additional fees or commissions.
However, with CFD trading, you would only need a small percentage of the total trade value to open a trade and maintain the same level of exposure. At XTB we give you a 10: 1 (or 10%) leverage on Barclays shares, so you would only need to make an initial deposit of € 2,800 to trade the same amount.
If the Barclays share price rises 10% to 308 cents, the value of the position would become € 30,800. So with an initial deposit of just € 2,800, this CFD trade would have left you a profit of € 2,800. That’s a 100% return on your investment, compared to the 10% return you would have obtained with physical stocks.
However, what is very important to remember about leverage is that although it can magnify your profits, it can also magnify your losses. So if the price moves against you, your losses could exceed your initial deposit – and that is why it is important to understand how to manage risk.