What is FOREX?

FOREX (FOReign EXchange market) is an international foreign exchange market, where money is sold and bought freely. In its present condition FOREX was launched in the 1970s, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from supply and demand.
As far as the freedom from any external control and free competition are concerned, FOREX is a perfect market. It is also the biggest liquid financial market. According to various assessments, money masses in the market constitute from 1 to 1.5 trillion US dollars a day. (It is impossible to determine an absolutely exact number because trading is not centralized on an exchange.) Transactions are conducted all over the world via telecommunications 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. Practically in every time zone (that is, in Frankfurt-on-Main, London, New York, Tokyo, Hong Kong, etc.) there are dealers who will quote currencies.

FOREX is a more objective market, because if some of its participants would like to change prices, for some manipulative purpose, they would have to operate with tens of billions dollars. That is why any influence by a single participants in the market is practically out of the question. The superior liquidity allows the traders to open and/or close positions within a few seconds. The time of keeping a position is arbitrary and has no limits: from several seconds to many years. It depends only on your trading strategies. Although the daily fluctuations of currencies are rather insignificant, you may use the credit lines, that are accessible even to currency speculators with small capitals ($ 1,000 - 5,000), where the profit may be impressive. (You can learn more about it in the section: The main principles of trading.)

The idea of marginal trading stems from the fact that in FOREX speculative interests can be satisfied without a real money supply. This decreases overhead expenses for transferring money and gives an opportunity to open positions with a small account in US dollars, buying and selling a lot of other currencies. That is, on can conduct transactions very quickly, getting a big profit, when the exchange rates go up or down. Many speculative transactions in the international financial markets are made on the principles of marginal trading.

Margin trading is trading with a borrowed capital. Marginal trading in an exchange market uses lots. 1 lot equals approximately $100,000, but to open it it is necessary to have only from 0.5% to 4% of the sum.

For example, you have analyzed the situation in the market and come to the conclusion that the pound will go up against the dollar. You open 1 lot for buying the pound (GBP) with the margin 1% (1:1000 leverage) at the price of 1.49889 and wait for the exchange rate to go up. Some time later your expectations become true. You close the position at 1.5050 and earn 61 pips (about $ 405). For the calculation of 1 pip click here.

Everyday fluctuations of currencies constitute about 100 to 150 pips, giving FX traders an opportunity to make money on these changes.

In FOREX, it's not obligatory to buy some currency first in order to sell it later. It's possible to open positions for buying and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit such as $ 2000, for working in the FOREX market, and grant a leverage of 1:100. That is, opening the position at $100,000, a trader invests $1,000 and receives $99.000 as a credit. The major currencies traded in FOREX, are Euro (EUR), Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD).

In order to assess the situation in the market a trader has to be able to use fundamental and/or technical analysis, as well as to make decisions in the constantly changing current of information about political and economic character. Most small and medium players in financial markets use technical analysis. Technical analysis presupposes that all the information about the market and its further fluctuations is contained in the price chain. Any factor, that has some influence on the price, be it economic, political or psychological, has already been considered by the market and included in the price. The initial data for a technical analysis are prices: the highest and the lowest prices, the price of opening and closing within a certain period of time, and the volume of transactions.

A technical analysis is founded on three suppositions:
Movement of the market considers everything;
Movement of prices is purposeful;
History repeats itself.
That is, technical analysis is a statistical and mathematical analysis of previous quotes and a prognosis of coming prices.
A number of technical indicators have been installed into the PRO-CHARTS trading system. Analyzing the indicators one can come to the conclusion about further movements of the quoted currencies. For a more detailed description of the indicators, analyzing price charts and volumes of trading, click here.

Fundamental analysis is an analysis of current situations in the country of the currency, such as its economy, political events, and rumors. The country's economy depends on the rate of inflation and unemployment, on the interest rate of its Central Bank, and on tax policy. Political stability also influences the exchange rate. Policy of the Central Bank has a special role, as concentrated interventions or refusal from them greatly influence the exchange rate.

At the same time one should not consider fundamental analysis just as an analysis of the economic situation in the country itself. A far bigger role in the FOREX market belongs to the expectations of the market participants and their assessment of these expectations. Various prognoses and bulletins, issued by the participants, have a strong influence on the expectations. Very often an effect of the so-called self-filfilling prophecy occurs when market players raise or lower the exchange rates according to the prognosis. But a deep and thorough fundamental analysis is available only for big banks with a staff of professional analysts and constant access to a wide field of information.

In spite of these different approaches, both forms of analyses complement one another. Traders who act on the basis of a fundamental analysis, have to consider some technical characteristics of the market (the main rates of support, such as resistance and resale), and supporters of the technical approach to the market must track the main news (interest rates, important political events).


The main merits of the FOREX market are:
The biggest number of participants and the largest volumes of transactions;
Superior liquidity and speed of the market: transactions are conducted within a few seconds according to online quotes;
The market works 24 hours a day, every working days;
A trader can open a position for any period of time he wants;
No fees, except for the difference between buying and selling prices;
An opportunity to get a bigger profit that the invested sum;
Qualified work in the FOREX market can become your main professional activity;
You can make deals any time you like.

What is FOREX?

FOREX (FOReign EXchange market) is an international foreign exchange market, where money is sold and bought freely. In its present condition FOREX was launched in the 1970s, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from supply and demand.
As far as the freedom from any external control and free competition are concerned, FOREX is a perfect market. It is also the biggest liquid financial market. According to various assessments, money masses in the market constitute from 1 to 1.5 trillion US dollars a day. (It is impossible to determine an absolutely exact number because trading is not centralized on an exchange.) Transactions are conducted all over the world via telecommunications 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. Practically in every time zone (that is, in Frankfurt-on-Main, London, New York, Tokyo, Hong Kong, etc.) there are dealers who will quote currencies.

FOREX is a more objective market, because if some of its participants would like to change prices, for some manipulative purpose, they would have to operate with tens of billions dollars. That is why any influence by a single participants in the market is practically out of the question. The superior liquidity allows the traders to open and/or close positions within a few seconds. The time of keeping a position is arbitrary and has no limits: from several seconds to many years. It depends only on your trading strategies. Although the daily fluctuations of currencies are rather insignificant, you may use the credit lines, that are accessible even to currency speculators with small capitals ($ 1,000 - 5,000), where the profit may be impressive. (You can learn more about it in the section: The main principles of trading.)

The idea of marginal trading stems from the fact that in FOREX speculative interests can be satisfied without a real money supply. This decreases overhead expenses for transferring money and gives an opportunity to open positions with a small account in US dollars, buying and selling a lot of other currencies. That is, on can conduct transactions very quickly, getting a big profit, when the exchange rates go up or down. Many speculative transactions in the international financial markets are made on the principles of marginal trading.

Margin trading is trading with a borrowed capital. Marginal trading in an exchange market uses lots. 1 lot equals approximately $100,000, but to open it it is necessary to have only from 0.5% to 4% of the sum.

For example, you have analyzed the situation in the market and come to the conclusion that the pound will go up against the dollar. You open 1 lot for buying the pound (GBP) with the margin 1% (1:1000 leverage) at the price of 1.49889 and wait for the exchange rate to go up. Some time later your expectations become true. You close the position at 1.5050 and earn 61 pips (about $ 405). For the calculation of 1 pip click here.

Everyday fluctuations of currencies constitute about 100 to 150 pips, giving FX traders an opportunity to make money on these changes.

In FOREX, it's not obligatory to buy some currency first in order to sell it later. It's possible to open positions for buying and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit such as $ 2000, for working in the FOREX market, and grant a leverage of 1:100. That is, opening the position at $100,000, a trader invests $1,000 and receives $99.000 as a credit. The major currencies traded in FOREX, are Euro (EUR), Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD).

In order to assess the situation in the market a trader has to be able to use fundamental and/or technical analysis, as well as to make decisions in the constantly changing current of information about political and economic character. Most small and medium players in financial markets use technical analysis. Technical analysis presupposes that all the information about the market and its further fluctuations is contained in the price chain. Any factor, that has some influence on the price, be it economic, political or psychological, has already been considered by the market and included in the price. The initial data for a technical analysis are prices: the highest and the lowest prices, the price of opening and closing within a certain period of time, and the volume of transactions.

A technical analysis is founded on three suppositions:
Movement of the market considers everything;
Movement of prices is purposeful;
History repeats itself.
That is, technical analysis is a statistical and mathematical analysis of previous quotes and a prognosis of coming prices.
A number of technical indicators have been installed into the PRO-CHARTS trading system. Analyzing the indicators one can come to the conclusion about further movements of the quoted currencies. For a more detailed description of the indicators, analyzing price charts and volumes of trading, click here.

Fundamental analysis is an analysis of current situations in the country of the currency, such as its economy, political events, and rumors. The country's economy depends on the rate of inflation and unemployment, on the interest rate of its Central Bank, and on tax policy. Political stability also influences the exchange rate. Policy of the Central Bank has a special role, as concentrated interventions or refusal from them greatly influence the exchange rate.

At the same time one should not consider fundamental analysis just as an analysis of the economic situation in the country itself. A far bigger role in the FOREX market belongs to the expectations of the market participants and their assessment of these expectations. Various prognoses and bulletins, issued by the participants, have a strong influence on the expectations. Very often an effect of the so-called self-filfilling prophecy occurs when market players raise or lower the exchange rates according to the prognosis. But a deep and thorough fundamental analysis is available only for big banks with a staff of professional analysts and constant access to a wide field of information.

In spite of these different approaches, both forms of analyses complement one another. Traders who act on the basis of a fundamental analysis, have to consider some technical characteristics of the market (the main rates of support, such as resistance and resale), and supporters of the technical approach to the market must track the main news (interest rates, important political events).


The main merits of the FOREX market are:
The biggest number of participants and the largest volumes of transactions;
Superior liquidity and speed of the market: transactions are conducted within a few seconds according to online quotes;
The market works 24 hours a day, every working days;
A trader can open a position for any period of time he wants;
No fees, except for the difference between buying and selling prices;
An opportunity to get a bigger profit that the invested sum;
Qualified work in the FOREX market can become your main professional activity;
You can make deals any time you like.

The Main Principles of Trading

In contrast to exchange transactions with real supply or real currency the participants of FOREX use trading with a margin deposit; i.e. marginal or leverage trading. In marginal trading, each transaction has two obligatory stages (they can be divided by period of time, which can be as long as you like): buying (selling) of currency at one price, and then selling (buying) it at another (or at the same) price. The first transaction is called opening the position, the second one, closing the position.
Opening a position, a trader furnishes a deposit sum from 0.5 to 4 per cent of the credit line, granted for the transaction. So, in order to buy or sell 100,000 US dollars for Japanese yens, you will not need the whole sum, but only from 500 to 2000 US dollars depending on your policy of controlling risks. When the position is closed, the deposit sum returns, and calculation of profits or losses is done. All the profit or losses caused by the change of currency rates is credited on your account.

Let's take a concrete example of getting a profit from the changing the rate of the Euro, from 0,9162 to 0,9292. If you have anticipated this change by using technical or fundamental analysis, you can buy the Euro cheaper for dollars, and then sell it back at a higher price. For example, if you choose leverage 1:100, then 99,000 dollars of the credit line, granted by the Internet broker, is added to 1000 dollars, and you buy the Euro at the price of 0.9162. As a result of this transaction we get: $ 100,000 / 0.9162 = Euro 109.146, 47.

When the rate changes (an average daily change of Euro is about 70 to 100 pips), you close the position and sell the Euro for dollars, but at the rate of 0.9292. You get 109,146. 47*0.9292 =101,418.89 dollars. Your profit is $ 1,418.89. The same transaction with leverage 1:200 would give you $2, 837.78 of profit, with leverage 1:50 the profit would be 709.45, with leverage 1:25 - 354.72.

We'd like to remind you that the higher the credit leverage, the higher is your profit if the fluctuation of the currency rate was anticipated correctly. However, if your anticipation was wrong, your losses will be bigger.

One cannot feel confident in the FOREX market without a thorough knowledge of the terms used there.

Foreign exchange quotes are a relation between currencies.

USDCHF - the cost of $1 in Swiss Francs.
USDJPY - the cost of $1 in Japanese yens.
EURUSD - the cost of Euro 1 in US dollars.
GBPUSD - the cost of 1 GBP in US dollars.
That is, quotes are expressed in the units of the second currency for a unit of the first one. For example, quote USDJPY 108,91 shows that $1 costs 108,91 Japanese yens. Quote EURUSD 0.9561 shows that 1 Euro costs 0.9561 US dollars.
The last figure in the quote is called "pip". The cost of the pip is different for every currency, and depends on the leverage and current quote.

The formula for calculating 1 pip is:


100,000/current quote without commas * K


where К=1 at leverage 1:100,
К=2 at leverage 1:200,
К=0,5 at leverage 1:50,
K=0,25 at leverage 1:25.

Examples:

USDJPY = 108.91 leverage 1:100
100.000 / 10891 х 1 = 9,18 USD

EURUSD = 0.9561 leverage1:200
100.000 / 9561 х 2 =20,92 USD
GBPUSD and EURUSD are direct quotes, i.e. when the chart goes up, GBP and EUR become more expensive, and when it goes down, the currencies become cheaper. USDCHF and USDJPY are backward quotes, and when the chart grows, prices on CHF and JPY fall, and when the chart goes down, the prices grow.

On direct quotes you buy according to ASK and sell according to BID. With backward quotes, you buy according to BID and sell according to ASK .

Trading in the FOREX market is realized in lots. When you open a position, you can choose the number of lots you want from 1 to 10. One lot equals $ 100,000. The deposit sum for one lot will vary from $500 to $2000, depending on the credit leverage you choose. Leverage is a financial mechanism that allows crediting speculative transactions with a small deposit. We give you an opportunity to choose a credit leverage in the range of 1:200 to 1:25.

In the course of trading you can fix your profit or cut off your losses according to the commands LIMIT and STOP that have been set up.

LIMIT is set up higher than the current meaning of the price.
STOP is set up lower than the current meaning of the price.

With these commands the positions is closed without additional orders when the price reaches the agreed level.

In the process of trading you can create pending positions, that will be activated when the price reaches the agreed level (open price). When creating and closing orders, a temporary delay occurs, and lasts for about 30 to 40 seconds. When you make an inquiry, you are given a real market price, which is the current price at the moment of proposal, not at the moment of inquiry.

The process of trading is described in detail in section Description of the Trade Terminal.

The main terms that characterize the account:

Deal, realization of 2 trade transactions, when currency is bought (sold), and then the reverse conversion is realized.
Balance, the sum on the account of a client after the last transaction is conducted.
Floating Profit, the current profit on open positions.
Floating storage, fee for postponement of an opened position over midnight GMT.
Equity = Balance + Floating + Floating storage.
Margin requirement, a necessary deposit sum calculated according to the formula
100,000 / K + 100,000 / K,
where K = leverage, and the number of items equals the number of open positions.
Percentage, index of an account.
Percentage = Equity / Margin Requirement. At Percentage lower than 50 % it's impossible to open new positions.
Margin call, condition of an account when all opened positions are closed by the Internet broker according to current quotes. It occurs at a Percentage lower than 10%.
Please note that contrary to the majority of other companies, in PRO-FOREX.com price levels of client's orders may differ from the current price only by 5 pips. However, very rarely are orders executed worse than requests, because of the high market volatility.

Conditions of work

The Internet broker PRO-FOREX.com gives an opportunity to work 24 hours a day on four major currencies against the US dollar (British Pound, Euro, Swiss Frank, Japanese yen) on the spot, i.e. according to the current prices on the international FOREX exchange market.



Minimum deposit $1000
Leverage 1:25, 1:50, 1:100, 1:200 (trader's choice)
Spread 3 pips (EURUSD and USDJPY)
4 pips (GBPUSD and USDCHF)
Measure of the lot $100.000
Carrying the position over midnight $8
Minimum volume of entering the market 1 lot (4 lots with leverage 1:25)




No fee is taken for deals. If there were no deals closed during a month, $15 should be paid.


Beginning of work
To begin working on the FOREX market via our company you should

- read the following documents:
SERVICE AGREEMENT
REGULATIONS FOR EXECUTING TRANSACTIONS ON THE EXCHANGE MARKET
RISK INFORMATION
- accept all the rest of the necessary documents directly in the Internet, having filled in the respective registration form.

If you haven't ticked the point "I wish to start working at once, accepting the documents here", then a package of documents (in two copies) will be sent to you by registered mail. We'd ask you to sign the received documents and return one copy to the address:

VIGRI Ltd.
12 Laki St.
Tallinn, 10621
Estonia

- place a margin deposit. This can be done by a bank money order. The money will be placed on your subaccount on the account VIGRI Ltd. (trademark: PRO-FOREX.com) in AP Anlage & Privatbank AG (Switzerland).

What is the difference between a demo account and ...

PRO-FOREX.com recommends that all its clients start trading with a demo account before opening a real account. It does not matter if you are an experienced trader in the FOREX market or not, because it's very important to get acquainted with the software and trading procedures via the Internet first, before selecting any trading strategy. The simplest way to learn the system is by using a demo account before opening a real account. xxx 1 xxx 2 xxx 3 xxx 4 xxx 5

Below we'll enumerate the main differences between working with a demo account and a real account.

1. In demo trading your PC will be your dealer, it will always open or close your position automatically according to the current rate. In real trading, one of our professional dealers does it by hand.
2. In demo trading, there'll be practically no delays between your inquiry and offer of the exchange to open or close a position, but in real trading the delay may take 30 to 40 seconds.

3. In demo trading you have no risks, and when your account expires, you can easily add any sum. To do that you should enter the user zone with the help of your account and password (Section "Demo Account").

4. If you use a real account, it may so happen that the market moves while you are closing your position according to a certain rate. In this case your order may be not fulfilled, and you'll receive an offer to close the position according to another (current) rate.

5. One should note that the so-called rubbish quotes (as a rule, these are single bounces for 30 or more pips from current quotes) are accepted by the computer as real ones on a demo account, and therefore they participate in the quote system. In a real account they are ignored.

6. If sometimes you feel that you cannot enter or exit your positions quickly enough via the Internet, you can call our exchange. To place your order via phone you should name your account number, password and the pair of currencies you are interested in. The dealer will tell you the rate in both directions, and after that you'll have about five seconds to make up your mind if you want to buy or to sell. Our dealers will not negotiate; the rate they tell you is the only rate at which you will be able to place your order at the moment.

7. Exchange rates are very changeable, very often the market 'jumps up' or 'falls down' for several pips. For example, between two quotes there can be a five-pips difference. The speed at which you enter your order into the system may influence the rate according to which you can enter the market. This is one of the many factors that influence the results of your trading.

8. The psychology of a player with real and 'virtual' money is different, but it's inevitable.

xxx 6 xxx 7 xxx 8 xxx 9 xxx 10

In PRO-FOREX.com we think that all the traders should act according to a certain trading plan. Before placing an order you should decide at what parameters you are going to enter and exit it. Before setting up these parameters you should think about the answers to the following questions:
How big is the sum that I could risk?
What ups and downs of the rate could I stand?
What are the conditions of the market & is the market changeable or stable?
When will I know if my anticipations and logic in opening the position are right?
But it's not enough just to have answers to the questions. We think that in order to be a successful trader you should make up a distinctive plan and follow it afterwards.
Many people are able to make up perfect plans, but they lack the discipline to realize them. In real trading, when your own money is at stake, sometimes it so happens that emotions prevent you from realizing a possibly absolutely correct trading strategy.

But in the system of demo trading such emotions and mistakes do not occur. We think that this is the main psychological difference between demo trading and real trading, which shows that it's necessary to learn to control your emotions when working with a demo account and transfer this convenience to your further professional activities.

PRO-FOREX.com sincerely wishes you to acquire all the subtleties of trading as soon as possible and successful work in the future.

FAQ and answers to them

1. How to open a real account?
To start working with the Internet broker PRO-FOREX.com you have to enter into a contract with us as well as an Addendum to it. For the details click here.
2. Where should I transfer deposit?
When all the necessary documents are accepted, you'll be sent the bank requisites as well as the requisites in the system of Internet payments Webmoney.ru. You'll be able to select the method for transferring the money. If you execute the contract through the Internet, the number of your subaccount will be sent to you by E-mail. In case we exchange the documents by fax, the number of the subaccount will be faxed to you.
3. Can I use the subaccount as a usual bank account?
No, you can not. The money on the subaccount is used only as your margin deposit for trading in the FX.
4. Will there be accumulated interest on the money in the subaccount?
Yes, PRO-FOREX.com adds interest to the money on the deposit. Interest is added on the minimum balance in the subaccount at 1 per cent per annum.
5. How to transfer the money from my subaccount to some other account?
You'll have to mail or fax a written order in a free form with the sum that you want to transfer and the requisites of the account into which you want to have the money transferred.
6. How much can I gain if I start trading in the FOREX market with a minimum deposit?Everything depends on the level of your experience. Very few professionals reach the level of profit 10 to 20 per cent a month. Most successful traders make 2 to 10 per cent a month. The level of profit depends on the sum of the margin deposit. It's sufficient to double or even treble the minimum deposit within a short period of time, but if the deposit is average or big, it's practically impossible to do it. You shouldn't forget that high profits are proportional to high risks.
7. What are the business hours of the FOREX market and PRO-FOREX.com?
The working hours of our company coincide approximately with the working hours of FOREX. We accept trading orders 24 hours a day from 11:00pm CET on Sunday to 10:00pm CET on Friday except during red-letter days in Europe.
8. What is the difference between the work of real and the work of demo accounts?Yes, indeed, there are some differences. For details click here.
9. Are there any limitations for the period of keeping an opened position?
No, there are not. The client pays $8 for deferring the position over midnight (GMT).
10. How to conduct transactions if access to the Internet is impossible?
You can always continue trading via the phone. Our dealer on duty will take your orders 24 hours a day from 11:00pm CET on Sunday to 10:00pm CET on Friday except during red-letter days in Europe. For details about trading via the phone, click here.
11. How long is the period of time between sending an inquiry about a quote and receiving an answer from the PRO-FOREX.com dealer?
Usually a dealer supplies the information in 30 to 40 seconds, if the inquiry was sent through the Internet. (On a demo account, the delay is 10 to 15 seconds). If the inquiry was made via the phone, the answer will be given in 5 to 10 seconds.
12. Many brokers give different quotes in real and demo trading. What about PRO-FOREX. com?
Quotes in real and demo trading are absolutely the same.
13. How near to the real price can you set up Stop and Limit orders?
Stop and Limit orders can not be set up nearer than at 5 pips from the current quote. However, you should know that if the movement in the market is strong ( this happens very seldom), your level of Stop or Limit orders and the level on which the order will be fulfilled may be different.
14. Can I turn to the dealers of PRO-FOREX.com for recommendations about my activities in the FOREX market or about the situation in the market?
No, you cannot. We do not take any responsibility for forming your market strategy. We are mediators, not a consulting company.
15. Can I change leverage as I wish?
PRO-FOREX.com gives you an opportunity to choose the leverage for each new position you are opening. You can choose out from the following variants: 1:200, 1:100, 1:50. It's allowed to use a leverage of 1:25, but then the position must consist of 4 or more contracts.
16. How many pips are there in a spread?
A spread in a quiet market contains 4 pips.
17. Why are your quotes different from the ones given by Reuters or Knight Ridder?The quotes you can see on these sites and on many others are given for information, but the prices you can see in the windows of our programs are given for trading; i.e., our company is ready to trade at these prices at the moment. Dealing prices in the windows of PRO-CHARTS are a more truthful reflection of the market, because real transactions are being concluded at these prices at the moment.
18. Which configuration of the computer do you recommend?
The new trading program has been designed for most standard computers. We recommend 64 MB RAM, 450 MHz. Any processor, such as Celeron or Pentium III. Also a modem 56k or equipment DSL or T1. Resolution of the monitor should be at least 800 x 600 pixels, and for working with the terminal the resolution of 1024 x 768 pixels is advisable. We recommend using a Browser