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Forex Trading

Trade CFDs on 70+ FX pairs and benefit from tight spreads and fast order execution

What is Forex?

The foreign exchange market (FX) as a whole, consists of many types of markets, including Spot FX, Future derivatives, Forward Derivatives, and finally the CFD derivatives market, which is the most popular for retail clients. All forex trading transactions combined make up the largest and most liquid financial market, with an average daily volume of over $5 trillion.

The FX CFD derivatives market is made up of buyers and sellers, the main participants being large international banks, who place orders via electronic trading systems. This market is traded OTC (not traded on any regulated exchange) and as such there is no uniform price but each of the main international banks is providing its own quotes with the spot market acting as the point of reference for the quotes provided.

It is worth mentioning that the spot FX market is also an OTC market dominated by the large international banks.

In forex trading, spot price of a currency pair is influenced by several factors, such as the economic outlook and geopolitical events in that region, as well as news data releases which may be perceived positively or negatively by the market.

Contracts for difference (CFDs), allow traders to buy (go long) or sell (go short), and make profit or loss from price movements, without having to physically purchase and exchange the underlying currency.

FX is quoted in pairs, with each representing a global currency or economy. The first currency is called the ‘base’ currency (representing the volume you wish to trade) and the second is called the ‘term’ or ‘quote’ currency (representing the current exchange rate).

For example, the price of EUR/USD represents the amount of $USD that can be exchanged for €1.

EUR/USD = 1.11361

This means that currently, €1 is equal to $1.11361

Prices are constantly fluctuating based on market conditions.

To put it simply, traders would go long if they believe that the base currency will rise in value against the term currency and would profit from an increase in price. On the other hand, if traders’ believe that the value of the base currency will fall in relation to the term, they will place a sell trade to try to profit from falling prices. If prices move

in the opposite direction to the traders’ forecast, they will make a loss.

FX currency trading is typically calculated in Pips, meaning that depending on your trade size, each pip is equal to a specific monetary value of the ‘term’ currency. This pip value is used to determine the PnL (profit or loss), based on how many pips you gain or lose in a trade, and is also used to display spread (the difference between the bid and ask prices).

At RockfieldTrade we quote all FX pairs to an extra digit after the pip, meaning that the last digit in any quote refers to a Point (10% of a Pip).

In FX currency trading, fractional pricing allows us to offer tighter spreads and provide more accurate pricing.

If you are new to online forex trading, we would recommend going through our online educational section to familiarise yourself with the market and how ‘Contracts for Difference’ trading works. We also provide ‘watch and learn’ videos and PDF guides.

Forex Articles

Trade Responsibily: There are several prop trading risk management strategies to boost profits. Effective risk management is one of the key skills to succeed with prop firms. Managing trading risks helps mitigate losses and protect the prop-funded capital – resulting in long-sustainability. As a forex trader yourself, learn to identify, assess, and mitigate various risks – while earning consistent profits with a prop firm.

As a reputable prop firm, Funding Traders encourages all clients to prioritize risk mitigation during the evaluation and funding stage. Traders will consistent risk management are eligible to stay consistent, trade bigger, and earn up to 100% profit split.
Maintain consistent position sizing to manage prop trading risks and increase profit potential. Before opening a new position, carefully evaluate the maximum amount you are willing to risk on each trade. Ideally, your position size should depend on personal risk tolerance and the current volatility of a currency pair. This way, you can maintain consistent performance and avoid overcommitting to a single position.

Funding Traders employs a 2% consistency rule for all clients. To minimize losses, you are required to maintain a consistent risk of 2% on each trade.
Keep in mind your position sizing will also depend on your preferred trading strategy. For instance, swing traders may consider risking even bigger amounts to maximize profits in fewer trades. Meanwhile, scalpers may prefer limiting risk on each position to capitalize on multiple frequent trades. Definitely, consistent position sizing is one of the key prop trading risk management strategies for sustainable profits.

Stress testing is one of the advanced prop firm risk management strategies to maximize profits. These tests help evaluate the performance of your trading strategies during different market events. By stress testing positions, you can adjust your risk management strategies before a vulnerable situation.
Leverage the prop firm’s trading platforms to run simulated environments and test your strategies for economic downturns, major price fluctuations, and other high-risk events. This way, you can stay prepared and make risk-focused decisions in all scenarios. Indeed, conduct stress tests for your risk management strategies for consistent profitability.
There are several strategies to manage prop firm trading risks for maximum profits. As a fundamental prop trading rule, you are required to maintain a consistent position sizing – risking below 2% of initial capital on each trade. Leverage our multi-instrument support to minimize risks and earn a competitive prop trading profit split from various financial markets.
You should also set stop losses and take profit orders to automatically open/close trades as per pre-defined requirements. While trading, strategically utilize trading leverage to reduce risk exposure for your funded account. Plus, you can perform continuous stress tests to optimize your risk management practices for all market events. Follow the points above for proven prop firm risk management strategies to boost overall earnings.