Trade Forex with XM. Table of Contents
- Trade Forex and CFDs online with XM
- XM offers one of the tightest Forex spread
- Instant Order Execution with XM from anywhere in the world
- What is Forex?
- How Forex is different from "Foreign currency deposits"?
- Who can trade Forex online?
- What's the risk of Forex trading?
- Manage the risk of Forex trading
- Control your leverage to manage risks
- Even professionals lose some trades
- Start Forex trading online with no hustle
Trade Forex and CFDs online with XM
Providing an investment environment that is competitive with institutional investors for individual investors, this is one of XM’s management philosophy.
XM values the opinions and requests of all customers in order to provide them with the best investment environment.
In order to provide an environment in which it is easier to trade, XM innovates its service from product specifications, trading tools, support systems and all the other perspectives.
XM listens to the voice of the customer and is evolving every day.
When trading FX with XM, in addition to profits earned by buying and selling currencies, there are also profits from “swap points” that you can earn daily by holding a position.
On XM’s trading platforms, high interest rate currency pairs such as Turkish lira/yen (TRY/JPY), Mexican peso/yen (MXN/JPY) South Aland/yen (ZAR/JPY) are also available for trading.
At XM, they negotiate with multiple financial institutions and present one of the narrowest spreads in the industry.
XM offers one of the tightest Forex spread
With XM, the orders entered by traders are transferred to multiple financial institutions participating in the interbank market (where financial institutions trade exchanges).
XM does not negotiate with only one of them, but after consulting with multiple companies, they select the conditions that are advantageous to the traders.
As a result, XM can offer narrow levels of spread within the industry.
A spread is the difference between the buy price (ASK) and the sell price (BID) of the currency pair, which is a profit for financial institutions, but a cost incurred by the customer for the transaction.
XM’s dollar/yen (USD/JPY) spread is floating from 0.0 pips average.
For example, if there is a company offering a spread of 0.6 pips, the difference will be 0.6 pips.
It will be a difference that can not be neglected in the FX market that can make large transactions with leverage.
The smaller these costs, the easier it is to aim for profits even in the short-term modest price movements, and the narrower the spread, the better the number of transactions.
Instant Order Execution with XM from anywhere in the world
XM’s goal in promoting in-house system development is to provide an “investment environment comparable to institutional investors”.
XM’s fast execution speed is one of the realizations of that.
With XM, you can trade without stress as if you were in a professional investment environment.
No matter how narrow the spread is, it doesn’t make sense if you don’t close at the best time.
Therefore, XM is thoroughly focused not only on one of the narrowest spreads in the industry but also on the order execution speed.
In other words, XM meets both of the two conditions of keeping trading costs as low as possible and steadily receiving orders from traders.
Therefore, you can pursue profits by trading exactly as you imagined.
If you have any questions about XM’s trading service, XM’s multilingual support team handles all inquiries and consultations from traders, from basic questions to troubleshooting.
Or you can also refer to XM’s FAQs here to get to know more about XM’s trading service.
What is Forex?
FX is an acronym for “Foreign Exchange” and you might find it difficult to understand the concept.
However, FX is actually a very simple mechanism, the point is to trade major currencies of the countries of the world.
And if you exchange again when the exchange rate fluctuates favorably, you will get a profit as much as the exchange rate fluctuates.
Have you ever been abroad and haven’t you felt that you had “gained” or “damaged” when returning the foreign currency exchanged when you left your country to your own currency after returning?
This is because the exchanged foreign currency is depreciating against the currency at the time of departure, or the currency is moving higher.
Forex trading is basically the same.
For example, let’s say you exchange 100,000 yen to 1,000 US dollars at a rate of 1 US dollars = 100 yen, but after a while, the rate changes to 1,10 US dollars = 110 yen.
This means that the value of the Japanese yen has fallen against the US dollar (the yen has weakened).
If you return to Japanese Yen at that time, you can receive 110,000 Yen instead of 1,000 USD.
In other words, the yen’s depreciation against the US dollar generated a profit of 10,000 yen.
Forex trading can basically aim for profit with the same idea.
How Forex is different from “Foreign currency deposits”?
Then, why does FX feel more profitable even though the basic mechanism is the same as the case of gaining by exchanging cash in foreign currency?
The reason is simple and clear, and there are some advantages unique to FX.
Now, remember again about foreign currency exchange.
Even at the same timing on the same day, there should have been a difference in the exchange rates between “Japanese Yen” to “US Dollar” and “US Dollar” to “Japanese Yen” for instance.
This is because the financial institution that accepts the exchange adds the fee to each rate.
FX is much cheaper to exchange than foreign currency deposits, which are well known as foreign currency products, as well as foreign currency exchange of cash.
In other words, the more profits are likely to be made.
Moreover, as mentioned above, in the case of cash in foreign currencies and foreign currency deposits, profits can be made only in cases where your currency depreciates.
However, FX can also make a profit even when your currency is likely to appreciate.
This is because it is possible to trade “buy your currency and sell foreign currency” before the value of your currency rises.
After that, when the value of your currency has actually increased, you can settle by the transaction of “selling your currency and buying back foreign currency”, and you can make a profit by doing so.
And above all, the biggest attraction of FX is that leverage can be used.
Leverage is a mechanism that allows you to trade large amounts with a small amount of money.
With XM, you can trade up to 888 times the foreign currency you have prepared.
For example, to deposit US$10,000 in a foreign currency deposit when US$1=100 yen, you need 1 million yen.
However, with XM, it is possible to purchase US$10,000 with the original amount of 11,000 yen.
In addition, you can expect a profit of swap points in FX.
Swap points are profits earned daily depending on the difference in interest rates on the currency pairs purchased.
For example, if you buy Turkish lira, which is a high-interest currency, you will get about 1 USD per 10,000 currencies every day until you settle.
Anyway, if you carry over the position, you can automatically get about 30 USD in one month and 400 USD in one year, so many people are doing FX trading for this purpose.
Who can trade Forex online?
According to a BIS (2019) survey, in the foreign exchange market, an average of US$6.66 trillion is traded daily.
In other words, a wide variety of people from beginners to professionals deal globally.
There are various purposes, and there are cases where foreign currencies are needed for trading, and there are cases where financial institutions are trading for investment purposes such as dealings (proprietary trading) and individual FX.
Even for the case of investment purpose, there are people who challenge ultra-short-term trading such as day trading, and others who are earnestly working on a medium to long-term span.
And each must have their own investment experience, skills, and methods.
In short, the exchange market is so diverse and open to everyone.
Even beginners with zero investment experience can start trading according to their needs, personality, budget, etc. through XM’s trading service.
XM also supports its traders by running bonus promotions.
There is a promotion for beginners which you can get $30 for free to start trading Forex.
For more information about XM’s Forex bonus promotions, visit the page here.
What’s the risk of Forex trading?
Of course, there are not many things in the world that have only merit.
If the market moves in the opposite direction to what you expected, you will lose as much as any other investment like a stock.
Furthermore, if leverage is applied, the loss will increase due to the exact opposite of the pattern in which profits have multiplied.
Therefore, there may be an image that “leverage is scary”.
However, if you keep the effective leverage (the ratio of the position you are actually building to the money you have deposited) that is commensurate with your budget, you will naturally be able to suppress losses.
XM also has an online calculator that lets you know how much leverage you can get by entering the currency and quantity you want to buy and sell, your own budget, etc..
Even beginners and inexperienced investors, they can use these tools to perform reasonable trading.
If you think “I want to try to increase money with FX, but I do not want to lose a lot”, it is said that the effective leverage ratio is generally safe at the beginning with a very small amount of money.
Manage the risk of Forex trading
Forex can be traded from a relatively small amount, and it is also advantageous in terms of transaction cost and can efficiently pursue returns such as foreign exchange gains and swap points, but it also has some risks.
First, let’s sort out what risks are involved.
The major ones are the followings:
- Side effects of leverage
The side effects of leverage are exactly what you need to pay attention to when turning over the merits. - Exchange rate fluctuations
Regarding exchange rate fluctuations, it is possible to aim for exchange gains due to fluctuations in market prices, but it is necessary to keep that risk in mind, as exchange rate losses will occur if they move contrary to expectations. - Interest rate fluctuations
Fluctuations in interest rates may have a positive effect or adverse effects, and if they cause a widening of the interest rate differential, they tend to have a positive effect. On the other hand, if the interest rate difference narrows, it may lead to a decrease in swap points and a drop in the market price. - Liquidity
Liquidity directly affects whether or not a transaction can be completed. With low market liquidity, some currency pairs are not very active, and it is difficult for them to trade at the desired price. In addition, even if trading is normally active, the momentum of trading may decline sharply due to the mood of the market immediately before the announcement of globally-focused economic indicators. - Slippage
Slippage is a phenomenon in which a contract is executed at a rate that is far from the desired price due to a sudden change in the market price. - Technical troubles
Technical trouble is not limited to FX, but is a risk common to all online transactions. Trading may become impossible due to a failure of communication equipment, communication line failure, or failure of the trading system.
Control your leverage to manage risks
With XM, it can be said that one of FX’s greatest attractions is that it can leverage to build a position that can reach up to 888 times the amount of the original (margin) and aim for a larger profit.
Conversely, if you make a mistake in your judgment, you may lose the deposited funds due to loss cut.
However, if you can easily reach a loss cut, it is because the effective leverage does not match your physical strength (finance).
If we do not build the maximum possible position with the margin we are depositing, but rather lower the effective leverage, even if there is some foreign exchange loss, we will not be pushed to the loss cut immediately.
The important thing is to control the effective leverage.
Generally, it is said that lower leverage is safe, so it is advisable to increase or decrease it slightly depending on your investment experience and confidence in the look-ahead.
Note that the trading condition is different depending on the account type you choose with XM.
For the comparison of XM’s all trading account types, visit the page here.
Even professionals lose some trades
Those who are steadily increasing their assets with FX may think that the odds of winning are high.
However, the reality is unlikely to be surprising.
What is striking in common with people who are good at trading is that they are more accurate when they make a mistake in reading, rather than having a high reading accuracy.
In extreme cases, 10 trades yielded 3 profits, and even if the remaining 7 trades suffered a loss, they are practicing trades that are positive in total.
The reason is that we are in the stance of “small loss”.
If the reading is incorrect, we will promptly put a stop loss order (loss cut order) to keep the loss small, and if the reading is correct, we will not make a quick profit-taking and try to grow the profit as much as possible.
And many of them seem to have finished the stop loss order at the time they open the position.
For example, when you build a buy position because you think that the market price will rise, you will also place a stop loss order using a “stop loss order” of “sell when the price falls below the specified rate”.
If the price rises as expected, this order will not fill.
However, if you drop it against your will, the close of the orrder will be made at the level of “Stop Loss” and you can suppress the loss.
You can also use “IFO order”, which allows you to place profit-taking and loss cut orders at the same time.
In the case of expecting the market price to rise, it is an order of “buy when the specified rate is reached” and when the order is filled, it is a “limit order” of profit determination that “sell when the rate rises to the specified rate”.
Start Forex trading online with no hustle
Speaking of investments that can expect large profits, stocks can come to your mind, but from the perspective of what is easy for beginners to start, it seems to be FX.
That’s because the number of currency pairs in Forex trading is fairly limited and easy to target, compared to stocks, which have to look for stocks that are likely to rise in price among thousands of stocks.
Also, because it is traded all over the world, the market is open 24 hours a day, and depending on the currency pair, you can start from a small amount of several hundreds dollars.
From short-term trading such as day trading to medium to long-term operations that aim for swap points, it can be said that FX is attractive for many people to use at their own pace.
XM runs multiple bonus promotions to support its traders’ activities.
For the list of XM’s all bonus promotions, visit the page here.
Please check XM official website or contact the customer support with regard to the latest information and more accurate details.
XM official website is here.
Please click "Introduction of XM", if you want to know the details and the company information of XM.
IronFX
Comment by Diletta
March 26, 2024
Awesome bonuses, good leverage. A few hiccups, but support rocks!