The forex (or foreign exchange) market is where you can trade global currencies. It’s the world’s largest and most liquid financial market, with daily transactions totaling over 6 trillion US dollars.
The high liquidity and volatile nature of the market allow traders to easily buy and sell currencies, providing them more short-term trading opportunities and greater potential gains.
On Deriv, you can trade forex by predicting an asset’s price movement without actually buying or owning the underlying asset (currency). This will be explained further in the latter part of this blog. First, let’s go over the currency pairs available to trade on our trading platforms.
Forex assets to trade
On Deriv, the forex assets available for you to trade are currency pairs and basket indices.
In forex trading, currencies are traded in pairs. The first currency is called base, and the second one is called quote. In the GBP/USD pair, for example, the British pound sterling is the base currency, while the US dollar is the quote currency. The price of this pair represents how much one British pound sterling is worth in USD.
Currency pairs are divided into 3 groups — major, minor, and exotic pairs.
Major pairs are the most actively traded in high volume (e.g. GBP/USD, EUR/USD, USD/JPY, and USD/CHF). Minor pairs are less popular and not as liquid as major pairs (e.g. EUR/CHF, CAD/JPY, and GBP/AUD), while exotic pairs are a major currency paired with a currency of an emerging economy (e.g. GBP/TRY, NZD/SGD, and EUR/ZAR).
In addition to these currency pairs, you can also trade forex basket indices.
Basket indices are weighted indices that measure the value of one currency against a basket of major currencies (each currency in the basket is weighted by 20%). On Deriv, these indices include the Australian dollar basket, Euro basket, British pound sterling basket, and US dollar basket.
- The AUD Basket measures the Australian dollar’s value against a basket of 5 global currencies (USD, EUR, GBP, JPY, CAD).
- The EUR Basket measures the Euro’s value against a basket of 5 global currencies (USD, AUD, GBP, JPY, CAD).
- The GBP Basket measures the British pound’s against a basket of 5 global currencies (USD, EUR, AUD, JPY, CAD).
- The USD Basket measures the US dollars’ value against a basket of 5 global currencies (EUR, GBP, JPY, CAD, AUD).
Let’s now go through the trade types that apply to forex.
You can trade forex on Deriv with 3 different trade types (also referred to as contract types) — CFDs, multipliers, and options. These trading contracts do not require you to actually own or buy the currencies that you want to trade, they allow you to enter into a contract that predicts which way you think the market will move.
How to trade forex with CFDs
CFD stands for contract for difference. Essentially, it is an agreement between a broker and a trader to exchange the difference between the open and close price of an asset.
If you think the price of an asset will go up, you can buy a CFD and benefit from that rise. If you think that its price will go down, you can sell a CFD and profit from that fall. The potential profit only applies when the market moves in favour of your prediction.
You can trade forex with CFDs on Deriv MT5 and Deriv X. Check out our video on CFDs for more information.
Deriv MT5 is a popular multi-asset CFD trading platform packed with innovative features as well as superior technical and fundamental analysis tools. Deriv X is another superb platform that lets you customise your trading experience with drag-and-drop widgets and intuitive tools. Both platforms offer high leverage and low spreads.
How to trade forex with multipliers
Multipliers allow you to amplify your potential profits without increasing your potential losses.
You can also further limit your risk with multipliers. Its stop out function ensures that you will not lose more than your initial stake. Additionally, multipliers have risk management features that let you better manage your trade: stop loss, take profit, and deal cancellation.
Multipliers trading is available on DTrader and Deriv GO.
DTrader offers you flexibility with stakes as low as $0.50, and the Deriv GO mobile app lets you enjoy a smooth trading experience wherever you go.
How to trade forex with options
Options let you potentially earn a payout from predicting market movements within a specific time period. On Deriv, you can trade forex with digital options on DTrader, DBot, and SmartTrader.
DBot allows you to build a trading bot and automate your trades without coding skills, while SmartTrader is yet another user-friendly platform that gives you access to your favourite markets.
Give forex trading a go with a free demo account after you sign up on Deriv. It comes pre-loaded with 10,000 USD of virtual money so you can practise trading before using real money.
Deriv X, Deriv GO, DBot, and SmartTrader platforms are not available for clients residing in the EU.
Options, Basket indices, and certain exotic currency pairs are not available for clients residing in the EU.
Trading conditions mentioned in this blog are not available for clients residing in the EU.