Foreign Exchange

Forex Trading

Forex Major Regulators & Compensation SchemesForex Major Regulators & Traders' Compensation Schemes

When trading online, regulation and compensation schemes are both important. Always remember that uncertainty is part of every financial market and all related processes.

🏦 Highlighting the Importance of Regulation

The Foreign Exchange market operates as a decentralized financial system without a central clearing service. To manage this, several government and supervisory bodies oversee Forex participants, ensuring they follow fair business practices. These authorities issue financial licenses and can impose penalties or revoke licenses if firms act improperly.

In many cases, there is also a compensation scheme to protect clients if a financial firm becomes insolvent.

Regulators’ Objectives

✅ Monitor financial firms and ensure they follow fair business practices

✅ Protect retail traders from fraud

✅ Ensure financial firms meet minimum liquidity requirements

✅ Reduce credit risk in the financial market

Under these regulations, brokers are subject to audits, reviews, and evaluations. Not all brokers are licensed or regulated by trustworthy authorities, so traders must carefully choose their partners.

Forex Trading

📅 ANNUAL FOREX SEASONALITY CALENDAR

-Key Seasonal Trends for 15 Forex Pairs Based on 18 Years of Monthly Data-

  • Data Period: 12/31/1999 to 10/1/2018
  • Calculations/Formulas: Microsoft Excel 2016 Professional Plus
  • Time: GMT (Eastern Time = GMT - 05:00)

◙ JANUARY:

(↓) BEARISH PATTERNS

  • EURGBP, average negative returns -0.72%, times (5-14), and -0.89% momentum

RECENT 5 PERIODS: 4 bearish out of 5

RELIABILITY: a relatively reliable seasonal pattern

 

◙ FEBRUARY:

(↑) BULLISH PATTERNS

  • EURGBP, average returns +0.71%, times (13-6), and -0.21% momentum

RECENT 5 PERIODS: 4 bullish out of 5

RELIABILITY: a relatively reliable seasonal pattern, after 2011

(↓) BEARISH PATTERNS

  • GBPCHF, average negative returns -0.99%, times (3-16), and -0.71% momentum

RECENT 5 PERIODS: 4 bearish out of 5

RELIABILITY: a considerably reliable seasonal pattern

Forex Trading

The Forex market has no physical location, as transactions are conducted through the electronic network of banks (ECN)TradingCenter’s Guide to the Forex Market

The FOReign EXchange is a global market where one currency is traded for another. The Forex market has no physical location, as transactions are conducted through the electronic network of banks (ECN). Anyone with a computer and internet access can trade currencies through a Forex broker.

  • The Forex market operates 24 hours a day, five days a week, from Monday to Friday 
  • The daily turnover exceeds 7 trillion US dollars (BIS Triennial Survey -2022)

🕰 Introduction to the Foreign Exchange Market

The Foreign Exchange market emerged in the 1970s when the global currency trading system shifted from fixed exchange rates to a floating-rate system. The fixed exchange rate system was established in 1944 under the Bretton Woods Agreement.

The History of Exchange Rates 1944-2025

This is the history of modern exchange rates, spanning from the 1944 Bretton Woods Agreement to nowadays (press the slider).

+ - The History of Exchange Rates Click to collapse

1944: The Bretton Woods Agreement establishes a fixed exchange rate system where major currencies are pegged to the US dollar, and the dollar is convertible to gold at $35/ounce. 🔗 Historical Perspective on Gold Prices

1958: European currencies become fully convertible, facilitating international trade.

1960s: Growing US deficits and inflation strain the system, leading to doubts about dollar-gold convertibility.

1971: US President Nixon suspends gold convertibility ("Nixon Shock"), ending the Bretton Woods system.

1971: Smithsonian Agreement adjusts currency pegs but fails to stabilize the system.

1973: Major currencies transition to floating exchange rates.

1973–1974: Oil crisis causes volatility, and the USD weakens due to inflation. 🔗 Crude Oil Trading

1976: The Jamaica Agreement formalizes floating exchange rates under IMF rules.

1980–1985: Volcker Shock (USD grows stronger due to the Fed’s high rates)

1985: Plaza Accord (Sept.) – G5 nations intervene to weaken the USD.

1987: Louvre Accord (Feb.) attempts to stabilize exchange rates.

1992: The Maastricht Treaty sets the stage for the euro.

1992: Black Wednesday – George Soros crashes the UK pound out of the ERM.

1994: Mexican Peso Collapse.

1996: The start of Online Trading.

1997–1998: Asian Crisis – Asian currencies crashed.

1998: Russian Ruble Crisis – Russia defaults and the Ruble devalues.

1999: Euro introduced electronically (EUR/USD launches at ~1.18 EURUSD).

2002: Euro notes and coins enter circulation.

2002–2008: Commodity-driven currencies strengthen (AUD, CAD).

2008: Financial Crisis – USD surges and EUR/USD drops from 1.60 to 1.25.

2010–2012: EU Debt Crisis – EUR weakens amid the debt crisis of the South.

2015: Swiss Franc De-Peg – CHF soars after SNB abandons EUR/CHF peg.

2016: Brexit – GBP falls from 1.50 to 1.30 vs. USD.

2020: COVID Pandemic – USD initially surges, then weakens due to Fed stimulus.

2022: Ukrainian War – EUR weakens on energy crisis.

Currency Symbols

The table below (press the slider) shows the symbols of the major international currencies.

+ - Currency Symbols Click to collapse

Table: Major Currency Symbols

Forex Currency

Symbols

 

US Dollar Index Wieght (*)
  • Euro

EUR

€

57.6%
  • US Dollar

USD

$

x
  • British Pound

GBP

£

11.9%
  • Chinese Yuan/Renminbi

CNY/RMB

CN¥

x
  • Japanese Yen

JPY

¥

13.6%
  • Swiss franc

CHF

fr

3.6%
  • Australian dollar

AUD

$

x
  • Canadian Dollar

CAD

$

x
  • New Zealand dollar

NZD

$

x
  • Russian Ruble

RUB

₽

x
  • Brazilian Real

BRL 

 R$

 x
  • Swedish krone

SEK

kr

x
  • Danish krone

DKK

kr

x
  • Norwegian krone

NOK

kr

x
  • Singapore Dollar

SGD

$

x

 

(*) The U.S. Dollar Index (USDX, DXY, DX) is a Forex market benchmark that measures the value of the U.S. dollar relative to a weighted basket of other major currencies.

Forex Market Hours & Session Overlaps

The Foreign Exchange Market operates 24 hours a day, 5 days a week (24/5). The trading sessions for each major market are as follows (in GMT and EST):

+ - Forex Trading Hours Click to collapse

Forex Trading Hours

  • Australia (Sydney) Session:

    • 10 a.m. – 7 p.m. (GMT)

    • 5 p.m. – 2 a.m. (EST)

  • Tokyo Session:

    • 12 a.m. – 9 a.m. (GMT)

    • 7 p.m. – 4 a.m. (EST)

  • Hong Kong / Singapore Session:

    • 1 a.m. – 9 a.m. (GMT)

    • 8 p.m. – 4 a.m. (EST)

  • Frankfurt Session:

    • 7 a.m. – 4 p.m. (GMT)

    • 2 a.m. – 11 a.m. (EST)

  • London Session:

    • 8 a.m. – 5 p.m. (GMT)

    • 3 a.m. – 12 p.m. (EST)

Forex Session Overlap

A session overlap occurs when the trading hours of two financial centers intersect. During a session overlap, trading volume increases, which typically leads to higher liquidity and greater volatility.

  • London and New York: 1 p.m. – 5 p.m. (GMT) - 8 a.m. – 12 p.m. (EST)

  • Tokyo and Sydney: 12 a.m. – 7 a.m. (GMT) - 7 p.m. – 2 a.m. (EST)

  • Tokyo and London: 8 a.m. – 9 a.m. (GMT) - 3 a.m. – 4 a.m. (EST)

Forex Trading

Forex Robots ⚖️ FOREX ROBOTS -COMPARISON TABLE

🔗 More: » Compare Signal Providers | » Forex Brokers

What is an Expert Advisor (EA)?

An Expert Advisor or else EA or Forex Robot, is a program that uses analyses and techniques like indicators, special filters, and rules. When all these tools agree on predicting a trend’s direction, a trade order is placed automatically. The trades can be either bullish or bearish, designed to work in any market condition.

📶 Key Features of an Expert Advisor:

  • 24/7 Trading: Trades around the clock without the trader needing to keep their PC on.

  • Trading Multiple Markets: An EA can track and trade multiple markets at the same time.

  • Trading without Human Intervention: The algorithm can open, modify, and close orders automatically without any manual input.

  • Backtesting and Optimization: The EA can be backtested using historical market data to optimize the strategy. It can also be tested on a demo account before using real money.

📊 Compare Forex Expert Advisors

The following table shows a comparison of Expert Advisors (EAs).

Forex Trading

⚖️ FOREX BROKERS COMPARISON TABLE

ECN/STP Forex brokers are especially suitable for day-traders, scalpers, and algorithmic traders due to their institutional-grade pricing and support for fast order execution.

Why Selecting ECN/STP Forex Brokers

An ECN/STP Forex broker electronically connects currency traders directly with liquidity providers, such as banks, hedge funds, and other market participants, through an automated matching system. This setup gives traders direct access to the Electronic Communication Network of banks, ensuring they receive the best possible trading conditions for their orders. Unlike market makers (Dealing-Desks), ECN/STP brokers do not take the opposite side of trades; instead, they aggregate live price quotes from multiple participants in the interbank market. Rather than marking up spreads, these types of brokers typically charge a fixed commission per trade.

Key Benefits for Currency Traders

  • The key benefits of ECN/STP brokers include tighter spreads, faster execution without requotes, and anonymity for large-volume traders.
  • ECN/STP brokers route client orders directly to the market, eliminating conflicts of interest.
  • They ensure quicker order execution with minimal price manipulation -features particularly important for day traders and trading systems based on Expert Advisors (EAs).
  • They often provide better overnight (SWAP) rates than dealing desk brokers.

More: » Compare Forex Robots | » Review Forex Brokers

  1. Trading Binary Options
  2. EURUSD
  3. GBPUSD
  4. USDJPY

Subcategories

Forex Pairs

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