What is Foreign Exchange?
The Foreign Exchange market, also known as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange involves the simultaneous buying of one currency and selling of another. The world's currencies mainly float freely against each other and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.

Where is the FX Market?
FX Trading is not based in any one place or places, as with the stock and futures markets. The FX market is considered an Over the Counter (OTC) or 'Interbank' market, due to the fact that transactions are conducted between two counterparties over the telephone or via the internet or a private electronic network.

Who are the participants in the FX Market?
The Forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.

When is the FX market open for trading?
Forex trading begins each day in Auckland, and moves around the globe as the business day begins in each financial centre, first to Sydney, Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night. It is truly a 24-hour market, as there is always an active range of counterparties. Currencies are traded continuously from Monday morning (Sunday afternoon Chicago/New York time) in New Zealand/Asia to the close of the business week on Friday afternoon in Chicago/New York.

What are the most commonly traded currencies?
The most commonly traded currency pair is EUR/USD, also known as "Eurodollar". It accounts for about 30% of all forex transactions. Next is USD/JPY, with about 20% of turnover. GBP/USD is the third major pair, known as "Cable", with about 11%. The most often traded or 'liquid' currencies are those of countries with stable governments, respected central banks, and low inflation. Today, over 85% of all daily transactions involve trading of the major currencies, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar.

Is Forex trading capital intensive?
No. Mandus Invest requires a minimum deposit of $5,000. Mandus Invest allows customers to execute margin trades at 1-3% leverage. It is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great. A more pragmatic margin trade for someone new to the FX markets would be 5:1 or even 10:1, but ultimately this depends on the investor's appetite for risk.

What is Margin?
Margin is a safety net for a position. It is roughly equivalent to the worst case scenario for a day. If the market moves against a customer's position, Mandus Invest will request additional funds through a "margin call" for the next day. If there are insufficient available funds, Mandus Invest will close out the customer's open positions.

What is a 'long' or 'short' position?
In trading parlance, a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price (the sometimes elusive buy low, sell high strategy). In this scenario, the investor benefits from a rising market. A short position is one in which the trader sells a currency in anticipation that it will depreciate. In this scenario, the investor benefits from a declining market. However, it is important to remember that every FX position involves being long in one currency and short the other.

How are currency prices determined?
Currency prices are affected by a variety of economic and political events and conditions, most importantly interest rates, inflation, political stability, economic strategy and speculative strategy. Governments are also active in the Forex market, attempting to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as Central Bank intervention. Sometimes the threat of this action is enough to influence the price. Any of these factors, as well as very large market orders, can increase both volatility and currency prices. However, the size and volume of the Forex market makes it very difficult for any one entity to "move" the market for very long.