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Explore the information and resources below to increase your understanding of how to trade forex. If you have questions along the way, contact one of our forex specialists available anytime via chat, by phone 866-839-1100, or by email 24/7.

Understanding the Basics

It’s a global market for exchanging currency between nations, and for individual speculators or traders.  Like its name implies, the retail off exchange forex market is not conducted on an exchange, which means there is no physical location where all currencies trade.

An important and essential concept to understand with forex is that it’s traded in pairs. This means you are buying and selling a currency at the same time. For example, you enter into a European euro versus the U.S. dollar trade, or EUR/USD. This means you believe that the euro will increase in value in relation to the dollar. Conversely, if the euro goes down with respect to the dollar, you could lose your entire deposit, or even more. If the euro goes go up and you’d like to take your profits, you would “unwind” that position by selling the euro and buying the dollar. That’s a very simple example, but should give you a general idea of how forex works.

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Trading Forex

Some things to consider before trading forex:

Leverage: Control a large investment with a relatively small amount of money. This allows for strong potential returns, but you should be aware that it can also result in significant losses.

Nearly 24/6 Market: Be responsive to market conditions and economic events knowing that you can trade almost 24 hours per day, 6 days per week – from market open on Sunday to market close on Friday.

Liquidity: Forex is a very active market with an extraordinary amount of trading, especially in the biggest currencies. Trading some of the more obscure pairs may present liquidity concerns.

Trading costs: Forex trading doesn't usually require payment of an exchange or license fee, but you will be required to deposit margin for the position. With a TD Ameritrade account, there is a $3.50 trading commission.

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Open Your Account

To start trading forex at TD Ameritrade, you’ll need to open a standard account. The Standard account can either be an individual or joint account. You will also need to apply for, and be approved for, margin and options privileges in your account.

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Choosing a Trading Platform

With a TD Ameritrade account, you’ll have access to thinkorswim, a powerful trading platform where you can trade forex, as well as other investments. This feature-packed trading platform lets you monitor the forex markets, plan your strategy, and implement it in one convenient, easy-to-use, and integrated place. One of the unique features of thinkorswim is custom forex pairing.

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In addition, TD Ameritrade has mobile trading technology, allowing you to not only monitor and manage your forex position, but trade currencies right from your smartphone, mobile device, or iPad.

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Developing a Trading Strategy

For any trader, developing and sticking to a strategy that works for them is crucial. Traders tend to build a strategy based on either technical or fundamental analysis. Technical analysis is focused on statistics generated by market activity, such as past prices, volume, and many other variables. Charting and other similar technologies are used. Fundamental analysis focuses on measuring an investment’s value based on economic, financial, and Federal Reserve data. Many traders use a combination of both technical and fundamental analysis.

The thinkorswim, trading platform offers technical analysis and third-party fundamental research and commentary, as well as many idea generation tools.  You can also use paperMoney® to practice your trading strategy without risking capital. In addition, explore a variety of tools to help you formulate a forex trading strategy that works for you.

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Building Your Skills

Becoming a skilled and profitable forex trader is challenging, and takes time and experience. With thinkorswim you’ll have access to a nearly endless amount of features and capabilities that will help build your knowledge and forex trading prowess. You can also contact a TD Ameritrade forex specialist anytime via chat, by phone 866-839-1100 or by email 24/7.  Explore our educational and research resources too.

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playthinkorswimVideos
01:27TD Ameritrade offers a powerful and intuitive trading experience through thinkorswim.
playUnderstanding Investing RisksVideos
8:26All investing carries risk, and understanding this risk is important. Various asset classes are discussed.
playiPad®Videos
00:30Take a tour of our powerful iPad apps, built with our most advanced trading technology.

AdChoices

Market volatility, volume and system availability may delay account access and trade executions.

Educational resources are provided for general information purposes only and should not be considered an individualized recommendation or advice.

Trading forex involves speculation, and the risk of loss can be substantial. Clients must consider all relevant risk factors, including their own personal financial situation, before trading.

Trading foreign exchange on margin carries a high level of risk, as well as its own unique risk factors. Forex investments are subject to counter-party risk, as there is no central clearing organization for these transactions. Please read the following risk disclosure before considering the trading of this product: Forex Risk Disclosure.

A forex dealer can be compensated via commission and/or spread on forex trades. TD Ameritrade is subsequently compensated by the forex dealer. Futures and forex accounts are not protected by the Securities Investor Protection Corporation (SIPC).

Forex trading privileges subject to TD Ameritrade review and approval. Not all account owners will qualify.

International investments involve special risks, including currency fluctuations and political and economic instability.

TD Ameritrade, Inc., member FINRA / SIPC / NFA . This is not an offer or solicitation in any jurisdiction where we are not authorized to do business. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.