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How Does Forex Trading Work

So What is Forex?

The Foreign Exchange market, also known as "Forex", "FX", "Spot FX" or just "Spot" is the oldest, largest and most liquid financial market in the world, tracing its history back centuries to Babylonian times. While the global financial markets were collapsing in 2008, the FX market experienced tremendous growth, reaching more than 1.78 million transactions per day – an average daily trade volume approaching $4trillion. That’s three times the stocks and futures markets combined. With so many investors and so much money changing hands each day, it is the perfect market for traders who use technical analysis tools. Forex trading offers investors an excellent way to diversify their portfolios, lower volatility and reduce market risk, and being a Global market it is possible to trade Forex 24 hours a day.


How Does Forex Work?

Forex trading is the simultaneous buying of one currency and selling of another, as traders speculate the value of one currency will strengthen or weaken against the other. As such, trading is always conducted in currency pairs. The first currency in the pair is known as the ‘base’ or ‘transaction’ currency and the second is known as the ‘quote’ or ‘counter’ currency, for example the pound and the US dollar (GBP/USD) or the US dollar and the Japanese Yen (USD/JPY). The price that is quoted corresponds to the number or quote currency that is required to buy a unit of the base currency.

Movement of currency is expressed as percentage in point, or ‘pip’ also known as ‘point’ which is the smallest unit of price for any currency. The size of the smallest incremental change depends on which is being traded. For the actively traded currencies for example GBP/USD a single pip equals the smallest change in the fourth decimal place - that is, 0.0001. However for lesser traded currencies the decimal place can be higher a noteworthy exception is the USD/JPY pair where a pip equals $0.01.

Unlike equity trading, Forex doesn’t take place via a centralised exchange and is instead conducted over-the-counter (OTC). Buyers and sellers trade directly with one another or through brokers, dealers and market makers, rates can therefore vary.


And what about Technical Analysis?

Technical analysis is the study of a securities price movement through the use of charts. Investors look for patterns and indicators on stock charts that will determine the securities future performance and exploit this information to make money whilst avoiding losses. Technical analysis has become increasingly popular over the past several years, as more and more people believe that the historical performance of foreign exchange, stocks or futures is a strong indication of future performance; therefore becoming a self fulfilling prophecy. More information about setting up technical analsysis alerts can be [Price & Technical Charts & Alerts| found here]


If you require any further guidance with using timetotrade’s new Forex Alerts tools, please contact us.


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Do you want to:

  • buy when your technical analysis chart conditions are met? Really buy, not just get an email or sms alert?
  • or sell when a support trend line is broken?
  • or back-test your strategy going back as far as 30 years?


TimeToTrade's Trigger Trading Technology™ is truly game changing. It gives you a trading advantage. The power to take your trading to a new level.


Open a FREE TimeToTrade account today to:


  • Trade UK, US and European Shares - apply now
  • Execute trades when your Price, Candlestick, Trend Line, Volume and Technical Analysis chart conditions are met using the Trigger Trading Technology® - learn more - help video
  • Email and SMS Trigger Trading™ Alerts - learn more
  • Trade Off The Chart - learn more
  • Back Test Trading Strategies with up to 30 years of historical data - learn more
  • Create Simulated Trading Accounts to test your Trigger Trading™ Strategies - learn more
  • Real time Forex, UK, European and US stock market data - learn more
  • 170+ Technical Analysis and Candlestick Pattern Indicators - learn more
  • All the tools you need to set up and run a successful investment club - learn more
  • Manage your Portfolio and calculate UK HMRC Capital Gains liabilities and SA 108 CGT Tax Returns - learn more
  • Create Trading Competitions for you and your friends - learn more
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Apply now to try our superb platform and get your trading advantage.



The information and data provided is for educational and informational purposes only. Interpretation and use of the information and data provided is at the user's own risk. All information and data on this website is obtained from sources believed to be accurate and reliable. However, errors or omissions are possible due to human and/or mechanical error. All information and data is provided "as is" without warranty of any kind. We make no representations as to the accuracy, completeness, or timeliness of the information and data on this site and we reserve the right, in its sole discretion and without any obligation, to change, make improvements to, or correct any errors or omissions in any portion of the services at any times. Past performance is not a guarantee of future results. Trading carries a high level of risk to your capital and can result in losses that exceed your deposits. It may not be suitable for everyone so please ensure you fully understand the risks involved.


All services are provided by TigerWit Limited. TimeToTrade is a trading name of TigerWit Limited (a company registered in England and Wales under number 9479466). Our Registered address is TigerWit, 7th Floor, Augustine House, 6A Austin Friars, London, EC2N 2HA, England. TigerWit Limited is authorised and regulated by the Financial Conduct Authority number 679941.


The trading services offered by TigerWit Limited are not available to residents of the United States and are not intended for the use of any person in any country where such services would be contrary to local laws or regulations. Subscriptions to TimeToTrade products are available if you are not eligible for trading services.


Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investor accounts lose money when trading spread bets with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. All clients should be aware that trading involves risk.

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