Currency abbreviation represents a shortened form of a currency name. Currency has its three-letter acronym or abbreviation.
Usually, money abbreviations or the currency name abbreviation follow ISO international standard – 4217.

Country currency abbreviation rule shows that two letters at the abbreviation start refer to the name of the country, and the third abbreviation letter is the currency name.

In video below we talk about major currency and their abbreviations.

In this table below we can see world currency abbreviations:

Forex trading has picked up pace in the last 10 years. You don’t have to be a traditional investor or trader to step into the Forex trading market. While it is fairly easy to start trading, making a profit is not as straightforward as you might think. You need to understand every pro and con of a currency pair, you need to decide the position that you will be holding, you need to check if Forex trading is legal in your country, and more. But, all the hard work and research will amount to nothing if you do not have a reliable forex broker by your side.

A few years ago we wrote an article on how to find a good forex broker in 17 practical steps. This year we realized that we need to give a simple answer to this question.

Find a Forex broker that you can trust. It is imperative because they will be in control of your monetary investment. What if you have good capital and a plausible trading strategy but your broker is not trustworthy? They can run off with your money, leaving you with nothing but a bruised pocket!

There are three the most important things to consider when traders want to find a good broker: regulation, support, payment options. If traders want to find a good forex broker they will need to analyze the most important broker’s characteristics such as regulation and security of funds. The security of funds and regulation is very often correlated. The greatest security in trading for any trader represents  A-Grade brokers regulation. High reputable brokers are regulated by USA (Commodity Futures Trading Commission CFTC, NFA) – Japan (FSA Japan) – United Kingdom ( Financial Conduct Authority FCA) – Australia (Australian Securities and Investments Commission ASIC) – Singapore (Monetary Authority of Singapore MAS) – Hong Kong ( Securities and Futures Commission SFC) – Switzerland (Financial Services and Markets Authority FSMA) – Germany (Federal Financial Supervisory Authority BaFin).

While all forex brokers offer Metatrader platform these days, payments and support are characteristics that are vital for future cooperation. Regulated and good forex brokers will offer several deposit and withdrawal options and provide fast payments. Good brokers offer live support, efficient ticket systems with fast response in 24 hours.

Some tips on how to get a broker on forex:

1. Know your needs

You can only find a compatible Forex broker when you are aware of your needs. First, you should know how much you will trade. Once you have decided that, assess if you will be comfortable with making big or small moves. By figuring this out, you can make informed choices while selecting a broker. If you believe that you will be capturing small moves by trading a number of times in a day, an ECN broker will be the right choice for you. This type of broker will be a good option for those traders who will be scalping. 

It would also be wise to have a particular number when it comes to investment. If you have a small capital, you will be trading micro-lots. With an investment of $5000, you can shift to the mini-lots. It is not tactful to open a standard account with capital that is less than $50,000. Now, choose a broker that is suitable for your lot size. You must also check the payment and withdrawal options offered by different brokers.

2. What is the broker offer?

By identifying your needs, you would be able to shortlist a few brokers. It’s time to compare the selected brokers. Every broker has a different USP, you need to find the one that will make trading easier for you. If you are a day trader, you won’t be needing a trading desk because there will be no time for back-and-forth communication. Day traders trade directly as making an offer through a trading desk is a time-consuming process and often leads to re-quotes. Thus, you can choose a broker that offers this liberty but this will not be ideal for those who are holding long positions. Such traders will find it extremely difficult to function properly without a capable dealing desk or customer support.

The next and the most important thing that you need to check is if your broker is regulated or not. There are a number of regulating authorities but you should focus on those brokers that are regulated in countries like the U.S.A., Canada, New Zealand, Japan, U.K., and Australia as these countries are deemed to be financially established.

Look for a broker that can offer competitive spreads. You are more likely to get it if you are a day trader. The next checkpoint on the list is the types of accounts that the broker is offering. Having the option of a demo account is major traction for many traders as they get to test the trading platform before investing the real money. You can use this demo account to test other services offered by the broker. For example, you can send numerous emails using the demo account and note the time taken by the customer support in responding. If they are not quick and efficient enough, it would be better to look elsewhere.

3. Look for reliable reviews

A majority of people read reviews before investing in anything. This is a good practice and can save you from making mistakes but when we are talking about brokers, you must know the source of information as well. Never blindly follow anything that you find about the broker if you cannot link it to a credible source. This holds for both positive and negative reviews. Positive reviews can be paid while the negative ones can be fueled by competitors. Rely on your objectivity and authentic published reviews. You can also talk to the other traders and investors who are using the services offered by your shortlisted broker.

4. Do beta testing

The other three points must have helped in eliminating a lot of brokers from your list. Now, instead of relying on someone else’s opinion, you can test the remaining brokers yourself. The best way to check if the broker delivers what they promise is by using the demo account offered by them. Once you have opened a demo account, start trading. Since these are dummy trades, you will not be losing any real money. Check if the spreads are tight and the trades are being executed instantly. You must also see how good is the trading platform. Is it constantly crashing? Are there glitches? If the trading platform is not fast enough, you can miss many opportunities in the future. 

Test out the demo account for a couple of weeks and then open a live account. Do not invest more than 10% of your capital at this time. Don’t forget that you are still testing the broker. Trade with this amount for a couple of weeks and keep posing questions to customer support. Check how quickly they respond to your queries.

The next crucial factor to check is the withdrawal time. After trading for at least two weeks, you must initiate a withdrawal. You might have to pay a small fee for it. The ideal time for this transaction should be 2-3 days. If it is taking longer, it can cause problems in the future with bigger withdrawals.

5. Be wary of bonuses

Always remember that nothing in the Forex market comes for free. There are many brokers that offer bonuses, for example, ‘Get $100 bonus cash when you open a $500 account with us’. They might credit your account with the bonus cash but they will definitely take it back from you in the form of one charge or another. Usually, the trader will get some kind of restriction when he or she can withdrawal money based on trading volume.

Conclusion
Good brokers are regulated, with excellent and efficient payment systems and hard-working support.

Forex trading is one of the most popular trading options as it does not require years of experience. All you need is to select a currency pair that you would like to trade, internet-enabled devices, a good strategy, and an excellent Forex broker. Finding the last component of this list is the trickiest and the most crucial as well. You can have good skills and capital but without a good Forex broker.

What is a Forex Trading Broker?

Looking at the origin of the word we see that the word broker is derived from the Anglo-French word  “brocour”, “broacher” ( one who sells). Forex brokers operate as an intermediary between traders and the trading market, buy and sell currencies on behalf of clients while charging a commission for the service.

Forex brokers are intermediaries. They connect traders with the interbank system. An interbank system is a network of banks that have trade relationships. Forex brokers take a quote from the bank of which they have access to forex liquidity and lines of credit. Many established brokers can get pricing from various banks and offer you the best possible option. You can agree with the price offered by them and they will do the transactions on your behalf.

What Does a Currency Broker Do?

Currency brokers provide a trading platform,  accounts for traders, streaming prices from major banks and the Electronic Broking Services (EBS) system, offer a leverage to traders, offer information and news feed, professionally managed accounts,  research services.

Other than acting as an intermediary, a Forex broker has a lot of other functions that facilitate Forex trading. Some of these functions are:

1. Brokers Provide a trading platform

You need a trading platform through which you can trade. You are required to open a trading account with a broker. Many brokers offer demo accounts that you can use to test their trading platform. You need to provide basic information to open a demo account but it does give you an insight into the platform. You can get accustomed to it before making a real investment.

2. Brokers offer a leverage to traders

Leverage is the borrowed capital or money that you invest in Forex trading. Forex brokers offer you all kinds of leverage, the most common being 1:100. This means that for every dollar, you can trade $100. Brokers give you the opportunity to trade more than what you have invested.

The more you invest, the more profit you can get. But, be wary as more investment can also lead to more losses. Forex brokers are required to be transparent about their rules related to leverage. They will disclose every detail in advance. If you don’t have a huge capital, you can use the leverage offered by Forex brokers and capitalize on it. Make sure that you are making the right decision and not trading without thinking properly about the risks involved.

3. Clarity of net balance

As the trades increase, it gets difficult to manage balances. Your account with a Forex broker allows you to deal with this situation easily. You will see two balances in your account. First is the actual balance that does not include your open trades and the other one is the net balance. This is the sum that you will have when all the trades are closed. This feature not only helps traders in managing their balances bt also allows them to see where they are standing.

4. Educational material 

Forex market is affected by a number of variables like the GDP, economic development, infrastructural development, and other things happening in the country. This is because these variables have a direct or indirect impact on the value of the currency. New investors find it difficult to keep a track of news that can affect the stock price. Fundamental and technical analysis is not easy for new traders. Therefore, many Forex brokers offer educational material to help traders and investors who are using their services. Traders can use this information to form their trading strategies. Without this educational material, many investors feel lost and end up making regrettable investments.

Forex brokers provide you with all the necessary tools and insights that enable traders and investors to function in the Forex trading market without any hiccups.

Why do I need a broker to trade forex?

Traders do not need brokers to trade forex or any other asset. Direct Access Trading is way of trading without brokers when traders can connect to major stock exchanges, forex and electronic communication networks using software. For this way of trading traders need to have large amount of investment and and be willing to trade without any leverage.

If trader has $50 000 using the broker’s leverage 1:100 trader can control $5 million dollars. If a trader uses direct access trading without a broker, trader will need 100 bigger amounts of money to trade with the same laverage.

Advantage of Direct Access Trading in forex trading is that this kind of trading will save  the trader expensis  on commissions, but it also allows for faster executions and immediate trade confirmations. The disadvantage is lack of leverage, trading and technical  support.

How to be a forex broker?

If some company deceide to be a forex broker that the company needs to find a trusted FX technology provider, buy a licence for trading platform, hire legal and financial experts, start procedure to get brokerage licence.  Regulated brokers need to spend huge amount of money for licences, introduction of a work system in the company, start capital.

Things to Consider Before Finalizing a Forex Broker

There are many things that you need to consider when you choose for a good Forex broker. Listed below are the two most important ones:

1. The Spread type and spread size

Your Forex broker gives you a quote for the currency pair. This price will slightly differ from the price that they will get in the market. For example, you might receive a quote of 1.3000/1.3005 for the currency pair EUR/USD. Here, the first number is what you will get from the broker should you decide to sell the pair and the second number is what the broker will charge should you decide to buy the pair. In this quote, the difference of .005 is referred to as 5 pips. This will be your broker’s commission. This bid spread can widen or become narrower in correspondence to supply and demand of trades.

This difference between bid and ask price is  spread. This difference is charged on the leverage trade size which is different than your actual account balance. A majority of brokers are transparent about their commission but you must also be certain about their spread type.

2. The Reputation of the Broker

Forex brokers are responsible for connecting you with the banks for which they have to adhere to certain rules and regulations. Although the Forex trading market has been operating since 1971, it was not always regulated. While most of the brokers are now regulated and have good international presence and reputation, it isn’t unlikely to run into a broker that is not regulated. You can follow the National Futures Association (NFA.futures.org) to know more about your chosen broker’s reputation.

Conclusion

Working without a Forex broker will leave you confused and maybe in debt, especially if you are a new trader or investor. Forex brokers offer many features that prove to be advantageous for traders and investors. All you need to do is to check that you are working with the one that believes in maintaining transparency and has an overall good reputation.

As we know, forex trading has become one of the most popular types of trading in recent years. Here, a trader or an investor would trade in a currency pair, for example – USD/EUR, JPY/USD, to make profits. You simultaneously buy and sell the currencies of the pair that you have selected. Your trade position and level of leverage contribute to your trade strategy. When you buy a currency, it is called a long position and when you sell a currency, you go short. But if you buy currency at 1.3 and it goes up a few pips how you can earn? Traders need a big amount of money so they can make any decent profit. They need leverage.  The next question is, what is leverage? Read to know more about Forex trading leverage meaning.

What does leverage mean in forex?

We tried to give leverage definition in our article What is 1:100 Leverage Meaning.

Leverage is the ability to use a small amount of capital in traders’ accounts controlling a larger amount in the market. What is leverage in trading terms? Leverage is the ratio of the trader’s funds to the size of the broker’s credit. Brokerage accounts allow the use of leverage through margin trading or in other words, brokers provide the borrowed funds to traders so they can increase trading positions. The leverage ratio can amplify both profits as well as losses.

So, the capital or the borrowed money that you invest in a currency pair is called the leverage. This is the money that is different than your minimum deposit. But, how leverage works in trading? Traders borrow money from their brokers so that they can trade larger positions in Forex. Brokers charge a percentage on this borrowed money. For every dollar that you earn using this borrowed sum, you have to give a part of it to the borrower. Since you have to pay interest on the leverage, you must be careful before selecting the level of leverage. Let’s find out what is the optimal level of leverage for forex traders and investors.

Which is the Best Level of Leverage?

In trading, everything is subjective because everyone has a different strategy and goals. To say that a certain level of leverage is the best would be off the mark. Your optimal level will depend on how you are planning to trade and the expected movements in the market. For example, breakout and scalper traders look for quick trades which means that high leverages will be better for them. On the contrary, lower leverage is better for positional traders.

You can see how your leverage resonates with your position, goals, strategy, and the expected market movement.

How to Choose the Best Leverage Level for Forex Trading?

Irrespective of whether you have experience in Forex trading or not, always make decisions based on your comfort level and the risk that you can bear. Your broker may offer you different deals and leverages, but you need to decide if you are satisfied with that before finalizing anything.

Online Forex brokers give you various options to choose from. The leverage can be anywhere from 1:1 to 1:1400. Generally, 1:100 leverage is considered a desirable level for Forex trading. What does 1:100 leverage level mean?

It means that if you invest $1000 at leverage equal to 1:100, your total trading amount will be 100 times your investment. That is $100,000 in this case. Leverage allows small traders to trade higher volumes. It allows them to trade beyond their means. 

Many new traders fall in the trap of looking for a higher level of leverage, expecting to make more profits using it. This is not an ideal practice. Higher investment leads to higher profits but it can also lead to higher losses as well. High leverage can be a problem if you don’t have enough experience in managing it. You need to learn how to manage leverage risk to keep debt from getting accumulated.

Is high leverage good in forex trading?
This question is very similar to the question: Is a lot of food in your house is good for your health? You can put a lot of food in your house but you do not need to eat everything that you have. The same principle is in trading.

So, is high leverage good in forex trading? The possibility for a trader to have large leverage can be an advantage in trading especially when the market is in the small range. The most important thing is that traders do not risk a lot of money, trade on a margin because that can bring to huge and fast loss.

Another example is a fast car. If you have a fast car, it is not a bad thing, if you make sure you drive at the speed limit. The same thing is with leverage.

Managing Leverage Risk

Never forget that leverage is nothing but borrowed money and whether you make profits or losses using it, it still needs to be repaid. Forex trading markets are seldom linear. The price movement may not be dramatic but the chances of making profits and losses are equal. Higher leverage can lead to increased losses. However, with proper risk management, you can use leverage to expand your investment. 

This is how it can be done:

Use a part of the investment: Trading with the entire capital is never a good option. You can avoid possible negative results by using a part of it at a time. 

Use risk management tools: There are many risk management tools like a stop-loss order that you can use to your advantage. You can find such features on your trading platform. 

Hold small positions: You can effectively manage the risk by holding small positions as they require less investment.

Conclusion

Forex leverage can open a lot of possibilities for you. It allows traders with limited capital to maximize their profits. Forex leverage is customizable. You can discuss this with your broker and choose a ratio that you are comfortable with. Never neglect the risk involved with any kind of borrowing. You must hope for the best but prepare for the worst. Leverage has the potential to maximize both profits and losses. Use risk management tools to keep yourself floating.

One can venture into the world of Forex trading with limited investment. Some Forex brokers even let their clients open an account with a minimum deposit as low as $100. Whether you have limited capital or not, everyone wants to use a higher sum than their actual investment to make more profits. This is possible with leverage.

Leverage plays a very important role in Forex trading and is offered by the broker. Let’s explore the term, its advantages, and its disadvantages.

What is Leverage in Forex Trading?

Leverage is the ability to use a small amount of capital in traders’ accounts controlling a larger amount in the market. Leverage is the ratio of the trader’s funds to the size of the broker’s credit. Brokerage accounts allow the use of leverage through margin trading or in other words, brokers provide the borrowed funds to traders so they can increase trading positions. The leverage ratio can amplify both profits as well as losses.

For a Layman, leverage would be a small thing that can be used for bigger purposes. In Forex trading, it is the ratio at which a small investment in your trading account controls a larger investment that is operating in the market. This difference in the two capitals is also known as the trading on margin in the stocks or forex market. In the stocks market, there is an interest charged on this margin but such is not the case in the Forex market. Traders are not required to pay any interest on this margin irrespective of your credit type and account type. Your Forex broker will offer a margin to you that you can use to trade.

You can read more details about what is leverage in forex in our article.

What is instrument leverage 1:100?
So, leverage we can describe as the ability to control a large amount of money using very little of your own. But, what is 1:100 leverage meaning?
In the foreign exchange markets, the leverage ratio is commonly as high as 1:100. Leverage 1:100 means that for every $1,000 in the trading account, traders can trade in the market up to $100,000 in value.

What are the Benefits of Trading Using Leverage?

Leverage is an important feature offered by Forex brokers. It helps you trade with higher capital and make more profits. For example, consider operating with a 1:100 leverage. This is the most common leverage in Forex. It means that with an investment of $1, you will be operating an investment of $100 in the market. $1 is your money and $99 is the borrowed money, your leverage. Since your operating amount is $100, you will be able to make more profits. This borrowed money will be sponsored by your broker and needs to be repaid.

Before leverage was introduced in the Forex market, a 10 % movement in the account for a year was something to look forward to. Everything was slow but leverage has changed it. Thus, the benefit of leverage is that it allows you to invest more money in the market that can fetch more profits quickly.

How to calculate leverage and trading margin?

The main leverage formula is:
Margin-Based Leverage Ratio = Total Value of Transaction / Margin Required

In this case, if the Margin-Based Leverage Expressed Ratio is 1:100 than the Margin Required of Total Transaction Value will be 1.00%. The margin requirement for 2% is 1:50 leverage.

Different Leverages

Leverage amounts are fixed by the brokers at their discretion. Different brokers have different ratios to offer to their clients. Their terms and conditions also vary. The most popular ones are explained below:

• 50:1 – This leverage is on the lower side and means that for every dollar in your account, you can use $50 to place a trade in the market. For example, if you have a deposit of $100 with a broker, you can trade with an amount that 50 times higher. In this case, $5000.
• 100:1 – As mentioned earlier, this is the most popular leverage in Forex trading and is usually offered to standard lot account holders. You get to trade $100 for every dollar in your account. As the minimum deposit amount for a standard account is typical $2000, you can trade with an amount equivalent to $200,000.
• 200:1 – This leverage amount is offered to mini account holders with a typical minimum deposit of $500. With this leverage, you can trade 200 times the amount in your account. If you only have a minimum deposit, you can still control $100,000 in the market. 
• 400:1 – This leverage is on a higher side. This leverage is not offered by all the brokers. You can usually get this is you are holding a mini account. As the minimum deposit is around $500, you can control a sum of $200,000 in the market.

How to Handle Leverage Professionally

Professional traders are not blinded by high leverage amounts. They generally use 20:1 or 10:1 leverage and make a number of small trades. This safeguards their capital. If you do want to take full advantage of leverage, do not invest all the amount in one trade. Move gradually and aim for consistent returns rather than a miraculous one-time deal. These professional tricks followed by veteran traders and investors will help you in establishing yourself as a Forex trader.
The best option for traders is to have brokers that can offer various leverages. In that case, the trader can change the leverage ratio in the broker’s website dashboard.

A Word of Advice

Leverage is nothing but borrowed money. You can make more profits with it but it can take an ugly turn as well. It only promises extra investment, not profit. There are many aspects that govern whether there will be gains or losses. Many traders, especially the new ones, aim for higher leverage, like fx trading 400 leverage, with the hope of making more profits. Higher leverage does not necessarily into higher profits. It can lead to equally high losses. We would suggest you aim for the leverage that you can easily manage and do keep in mind that the chances of making losses are real too. Instead of having an optimist approach, have a realist approach towards leverage and Forex trading.