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What is Forex?

In simple words, Forex means Foreign Currency (e.g. US Dollar, Japanese Yen, Euro and Pound Sterling).

How is Forex traded (Locally)?

At its most basic level, forex trading is done through currency exchanges (called money changers). You take one currency (e.g. US Dollars) to your local money changer and he gives you Pak Rupees in return or you take Pak Rupees to the money changer and he gives you other currencies (e.g. Euro, Pound, US Dollar as per your demand) in return.

How is Forex traded (Internationally)?

In the international market, forex (or currencies) are not traded this way (i.e. through money changers), because of the following risks:

a. Risk of theft or snatching
b. Physical movement of hard cash is a time-taking process
c. Money changers cannot handle big transaction volumes (that involve billions of Dollars).
d. This form of trading is not much convenient

Internationally, forex (or currencies) are traded through Electronic Currency Exchanges (or money changers) which are both sophisticated and fast. These exchanges can handle transactions of trillions of Dollars at a time.

Who trades Forex?

Forex (or currencies) are traded by Banks, NBFCs (Non-Banking Finance Corporations), Mutual Funds, Institutions as well as Individuals. Currencies are the most widely traded items in the world.

How can I trade Forex?

In order to trade forex (or currencies) with convenience, you need to have access to one of the International Currency Exchanges. As mentioned earlier, these exchanges are Electronic. That means you don’t need to be physically present at an exchange, in order to trade the currency, you have. You can trade from the comfort of your home, office or anywhere in between. All you need is a smartphone and an active internet connection.

Why should I trade Forex?

  • Most Liquid Market: Forex market is the most liquid market in the world. It means that you can liquidate your holdings whenever you like whether it is in the day or night. You don’t need to wait in order to sell something you have bought.

  • Open 24 hours: You can trade forex at any time of the day or night.

  • Most traded items: Foreign Currencies are the most traded items in the world with an Average Daily Turnover of over 5 trillion USD.

  • It’s all about Money: In Forex, it’s all about money. No matter which currency you buy or sell, all you will be doing is ‘Buying money for money and Selling money for money’. Simply put, you will be exchanging one currency with another currency. It means you will be selling one currency to buy another currency and so on. At the end of the day, all that is left with you is money (i.e. some currency).

  • Guaranteed Trading: Both buyers and sellers will be available in the market at every point in time. This means, if you had bought a currency and now you want to sell it, there will be at least one buyer present in the market who is ready to buy that currency from you.

  • Presence of a Market Maker: Presence of a market maker means that all your orders are guaranteed to be executed regardless of what the circumstances may be.

  • Real-time trade settlement: Real-time trade settlement means that all the trades you open and close are settled in real time (without any delay).

  • Example:
    In August 2014, International Oil prices were around a 100 USD per barrel. By the end of August 2015, they have fallen to around 40 USD per barrel i.e. a fall of 60 pc in a single year. This phenomenon alone has caused the tables to turn, around the world. Due to this fall in oil prices, Pakistan’s trade deficit has shrinked widely, eventually turning into surplus. As a result, the inflation rate in the country has dropped which has caused the State Bank to decrease its Discount Rate. As of Dec 2015, the Discount Rate (or Interest Rate) of the State Bank of Pakistan has fallen from 9.5 pc in August 2014 to 6.5 pc in Aug 2015. That is a fall of about 30 pc in a year. As a result, commodity prices in the country have lowered making the cost of living cheaper. Petrol from a local filling station can be purchased in about 70 Rs a litre which used to be above 100 Rs a litre just a year ago. The cost of doing business has also decreased significantly due to the decrease in interest rates because now you can get loan from the bank at a lower cost as compared to the cost a year ago. This decline in financial costs has also caused auto financing and home financing to surge which enables people to afford a better life at a lesser cost. All this is the impact of change in price of a single item. Having seen how big an impact the movement in price of a single item or commodity has had on every one of us, you can better understand the importance of trading in this market.

How can I open an account?

You can apply for an account if you have a valid CNIC/Driving License/Passport and a Bank Account.

Just fill in the account opening form below and leave the rest to us.

How much should I invest?

You can start trading with as little as 500 USD.

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