What is 'Real-Time Forex Trading'

Real-time forex trading is a form of speculation in which a trader bets on the movement in the exchange rates of foreign currency pairs. This type of trading involves placing an order to buy or sell a specific currency pair at the current exchange rate. Real-time FX trading requires the use of real-time forex charting software.

BREAKING DOWN 'Real-Time Forex Trading'

Forex currency traders perform real-time forex trading on the foreign exchange market. To do this, they use analysis based on technical and fundamental indicators, which help them forecast the movement of the currency pair traded. Because real-time currency trading is wholly electronic, execution speeds are extremely fast, allowing the trader to quickly buy and sell currencies in an attempt to cut losses and take profit.

High volatility, high risk and the potential for significant losses are a reality with forex trading. Because of this, the ability to access information in real-time, or ensure that buying and selling occur without any significant lag time, is of utmost importance to traders. Decisions can only have the intended result if based on accurate and data.

The Composition of Forex Trades

On the forex market, the largest market in the world, traders buy and sell various currencies around the globe. Forex trading involves the purchase and sale of currency pairs. Currency pairs are the national currencies from two countries coupled for trading on the FX marketplace. Both currencies will have exchange rates on which the trade will have its position basis.

The calculation for the rates of exchange between foreign currency pairs is as a factor of the base currency. A typical currency pair listing may appear as, EUR/USD 1.3045. In this example, the euro (EUR) is the base currency, and the U.S. dollar (USD) is the quote currency

When traders purchase a currency pair on the forex market, they buy the base currency while simultaneously selling the quoted currency. When traders sell a currency pair, they receive the quoted money and sell the base currency.

Real-Time Forex Trading Accounts

Trades pass through a broker where an individual holds a standard, mini, or micro account. Standard forex accounts require prior funding and order lots of 100,000 base units, Mini accounts allow 10,000 unit trades, and Micro accounts allow 1,000 base unit trades. Also, Standard accounts enter orders in multiples of 100,000, whereas mini account holders place them in multiples of 10,000. Micro accounts may use any multiple of 1,000.

The forex market is open for 24 hours, five days per week. Buying and selling among traders scattered across different time zones around the globe can complicate forex trading. However, it can also provide an excellent opportunity for traders because real-time forex trading can occur at any time of day, fitting into any schedule.

Many forex brokerages make real-time forex trading charts available online to clients. Sites that offer free trading charts may not guarantee the information is accurate or timely. Use these websites with caution, and before taking action in the market, ensure that the table you are using is a real-time forex trading chart.

(To learn more about forex trading, read Investopedia's Forex Walkthrough.)

RELATED TERMS
  1. Forex Training

    Forex training is a guide for retail forex traders, offering ...
  2. Dual Currency Service

    A dual currency service allows investors to speculate on exchange ...
  3. Currency Pairs

    Currency pairs are two currencies with exchange rates coupled ...
  4. Base Currency

    The first currency quoted in a currency pair on forex. It is ...
  5. Forex Options Trading

    Forex options trading allows currency traders to realize gains ...
  6. Forex Broker

    A forex broker is a service firm that offers clients the ability ...
Related Articles
  1. Trading

    The Pros & Cons Of A Forex Trading Career

    Trading foreign currencies can be lucrative, but there are many risks. Investopedia explores the pros and cons of forex trading as a career choice.
  2. Trading

    Forex or Stock Trading: Which Works For You?

    Even though the odds favor stock trading, forex trading has several advantages to offer a particular type of investor.
  3. Trading

    Can Forex Trading Make You Rich?

    Forex trading may be profitable for hedge funds or unusually skilled currency traders, but for average retail traders, forex trading can lead to huge losses.
  4. Trading

    How to Build A Forex Trading Model

    Forex trading markets work 24/7, providing ample opportunities to make profitable trades. How can you build a profitable forex trading model for yourself?
  5. Trading

    10 ways to avoid losing money in forex

    When approached as a business, forex trading can be profitable and rewarding. Find out what you need to do to avoid big losses as a beginner.
  6. Trading

    6 top-traded currencies and why they're so popular

    Every currency has specific features that affect its underlying value and price movements in the forex market. Learn why these currencies are especially popular for trading.
  7. Trading

    5 Tips For Selecting A Forex Broker

    Discover the best ways to find a broker who will help you succeed in the forex market.
RELATED FAQS
  1. How is spread calculated when trading in the forex market?

    First, remember that in the forex markets investors trade one currency for another. Therefore, currencies are quoted in terms ... Read Answer >>
  2. What are the most common currency pairs traded in the forex market?

    There are many official currencies that are used all over the world, but there only a handful of currencies that are traded ... Read Answer >>
  3. How does the foreign exchange market trade 24 hours a day?

    Because foreign currencies are in high demand, the forex market is open 24 hours a day, and trading is not done at one central ... Read Answer >>
  4. What types of accounts are available for forex trading?

    There are many different types of forex accounts available to the retail forex trader. Demo accounts are offered by forex ... Read Answer >>
  5. How do you Fund a Forex Account?

    Forex traders are usually given several options when deciding how to deposit funds into trading accounts, learn how and what ... Read Answer >>
Trading Center