Advantages of Trading FOREX Over Stocks and Commodities
There are many advantages to Trading FOREX as your main income generator. Let's start by something that may be worrying you already.
"Do I need a Diploma or some kind of Certification to trade FOREX?" The answer is this:
When attempting to make more profit than losses on thefluctuation of exchange rates between major currencies(i.e., Trading the FOREX), nobody is going to ask you for adiploma, a formal license or verify the amount of hoursyou've spent studying the Foreign exchange market andbanking industry. All you need is the proper training.
But this is not the only advantage you get when trading FOREX, compared to other ways of investment and speculation; i.e. Stocks and Commodities. You have a whole bunch of advantages over these other options that will be enumerated in the following paragraphs.
The Main Benefits of Trading the FX Spot Market:
1): FOREX is the largest financial market in the world.
With a daily trading volume of over $1.5 trillion, the spotFOREX market can absorb trading sizes that dwarf thecapacity of any other market. In fact, when compared withthe $50 billion daily market for equities or the $30 billionfutures market, it becomes quickly apparent this gives you,and millions of other FOREX traders, almost infinite tradingliquidity and flexibility.
2): FOREX is a TRUE 24-hour market.
The FOREX Market never sleeps. Trading positions can beentered and exited at any moment - around the globe, aroundthe clock, six days a week. There is no waiting for anopening bell as in the case of trading stocks. It is a 24-hour, continuous electronic (ONLINE) currency exchange thatnever closes. This is very desirable for you if you want totrade on a part-time basis, because you can choose when youwant to trade: morning, noon or night.
3): There is never a Bear Market in FOREX.
You can have access to a seamless, mutually-inclusive (two-way) exchange of currencies. Meaning, because currenciestrade in "pairs" (for example, US dollar vs. yen or USdollar vs. Swiss franc), one side of every currency pair(for example, USD/JPY - JPY = YEN) is constantly moving inrelation to the other. Thus, when you buy a particularcurrency, you are actually simultaneously selling the othercurrency in that particular pair. As the market moves, oneof the currencies will increase in value versus the other.Of course, it is up to you to choose the correct currency tobe long or short. Since currency trading always involvesbuying one currency and selling another, there is nostructural bias to the market. This means you have equalpotential to profit in both a rising or falling market.
4): High Leverage - up to 200:1 Leverage.
You are permitted to trade foreign currencies on a highlyleveraged basis - up to 200 times your investment with somebrokers. This is primarily attributed to the higher levelsof liquidity within the currency markets. Standard 100,000-unit currency lots can be traded with as little as 1%margin, or $1,000. Mini FX accounts are permitted to tradewith just 0.5% margin -- in other words, just $50 allows youto control a 10,000-unit currency position. Futures traders,who are accustomed to margin requirements generally equal to5%-8% of the contract value, will immediately recognize thatthe FOREX market provides much greater leverage, and forstock traders, who must post at least 50% margin, thereā??s nocomparison. If you are looking for an efficient use oftrading capital, this is it!
5): Price Movements Are Highly Predictable.
Although currency prices in the FX market may be volatile,they generally repeat themselves in relatively predictablecycles, creating trends. The strong trends that foreigncurrencies develop are a significant advantage for traderswho use the correct "technical" methods.
Unlike stocks, currencies rarely spend much time in tighttrading ranges and have the tendency to develop strongtrends. Over 80% of volume is speculative in nature and, asa result, the market frequently overshoots and then correctsitself. As a technically-trained trader, you can easilyidentify new trends and breakouts, which provide formultiple opportunities to enter and exit positions.
6:) Commission-free Trading and Low Transaction Cost
When you trade FOREX, through one of our recommended brokers(this info is in our private resources section), you'll doit totally commission-free! These brokers don't chargecommissions to trade or to maintain an account, and thatgoes for all clients trading the FOREX through them,regardless of your account balance or trading volume. EvenMini FX traders can buy and sell currencies online,commission-free.
What about trading fees? There are none of the usual fees towhich futures and equity traders are accustomed -- noexchange or clearing fees, no N_F_A or S_E_C fees. Becausecurrencies trade over-the-counter (OTC), via a globalelectronic network -- in FOREX, what you see is what youget, allowing you to make quick decisions on your tradeswithout having to worry or account for fees that may affectyour profit/loss or slippage.
In the equities markets, you must pay both a commission andexchange fees. The over-the-counter structure of the FXmarket eliminates exchange and clearing fees, which in turnlowers transaction costs.
So, if FOREX broker don't charge commissions, how do theymake money? Like all traded financial products, over-the-counter currency trading involves a bid/ask spread, whichrepresents the prices at which your counterparty is willingto trade. Because the currency market offers round-the-clockliquidity, you receive tight, competitive spreads bothintra-day and night. Stock traders can be more vulnerable toliquidity risk and typically receive wider trading spreads,especially during after-hours trading.
7): Instantaneous Order Execution and Market Transparency.
Market transparency is highly desired in any tradingenvironment. The greater the market transparency, the moreefficient the market becomes. Unlike other markets wheretransparency is compromised (like in the Enron scandal),FOREX markets are highly transparent (i.e., analyzingcountries, and having access to real-time research / news,is easier than companies).
Because of this transparency, as an FX trader, you will beable to exercise risk management strategies in accordance tothe fundamental and technical indicators we teach atRapidForex.com
The FX market offers the highest level of markettransparency out of all the financial markets. Because ofthis, order execution and fill confirmation usually occur injust 1-2 seconds. Markets that do not offer executableprices and force traders to absorb slippage obviouslycompromise the trader's profit potential considerably.
In the forex world, order execution is all-electronic andbecause you'll be trading via an Internet-based platform,instantaneous execution is routine. There are no exchanges,no traditional open-outcry pits, no floor brokers, andconsequently, no delays.
Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.
You know the old joke:
A Look at Online Forex Brokers
An online forex broker is a firm that facilitates retail trading using Internet technologies. Global Forex Trading (GFT), one of the popular online forex brokers. It provides retail traders with a free demo trading account, allows users to open a live account, gives live help, provides software called DealBook FX 2, and allows viewing of account documents. (DealBook FX 2 can be downloaded for the demo trading account).
The Seven Most Traded Currencies in FOREX.
Currencies are traded in dollar amounts called "lots". Onelot is equal to $1,000, which controls $100,000 in currency.This is what is known as the "margin". You can control $100,000worth of currency for only 1,000 dollars. This is what is called "High Leverage".
How to Trade Currency
We all know when you go on a trip to another country; you need to take some travelers checks and some cash in the currency of that country. This can be advantageous because one country's currency is usually worth more or less than the other. So your 100 USD could be worth 130 Canadian dollars, giving you more purchase power.
Throughout our course on futures trading, we have tried to point out to you that there is a great difference between having an investor attitude and being a trader. There are also many similarities. In one sense, a trader is someone who invests in his own trading ability. Therefore, in that sense trading is investing. Trading and investing are interrelated. You come to realize this through experience.
Option Arbitrage in the Forex Market
What is arbitrage? Arbitrage is the simultaneous buying and selling of identical financial instruments taking advantage of price discrepancies between different brokers, exchanges, clearing firms, etc. and thus locking in a profit. On paper, arbitrage is a risk-less trading strategy. In the real world however, risks abound.
What are Your Options Regarding Forex Options Brokers?
Forex option brokers can generally be divided into two separate categories: forex brokers who offer online forex option trading platforms and forex brokers who only broker forex option trading via telephone trades placed through a dealing/brokerage desk. A few forex option brokers offer both online forex option trading as well a dealing/brokerage desk for investors who prefer to place orders through a live forex option broker.
Forex Market Overview
"FX" is an abbreviation of "forex" or "foreign exchange." Foreign exchange is the largest and most liquid market in the world trading approximately $2 trillion every day (that's over 30 times the daily volume of NASDAQ and NYSE combined). The forex market is a cash interbank/interdealer market. In simplest terms, this means the foreign currencies traded in the forex market are traded directly between banks, foreign currency dealers and forex investors wishing either to diversify, speculate or to hedge foreign currency risk. The forex market is not a "market" in the traditional sense due to the fact that there is no centralized location for fx trading activity and, therefore, trades placed in the forex market are considered over-the-counter (OTC). Forex trading between parties occurs through computer terminals, exchanges and over telephones at thousands of locations worldwide. CFOS/FX clients can trade through online forex trading platforms and/or over the telephone directly with a forex broker on our trading desk.
FOREX Trading Philosophy
Keen on starting FOREX trading? Why would you not be? Many beginning FOREX traders are captivated by the allure of easy money. FOREX websites offer 'risk-free' trading, 'high returns' and 'low investment' ? these claims have a grain of truth in them, but the reality of FOREX is a bit more complex. As with anything in life, what you put in will determine what you get out.
The Secrets of the Super-Traders
The first and perhaps most important "secret" is to realize that your methodology or approach (no matter how good) is only part of being a highly successful trader. This applies to any trading style including, day trading, swing trading or position trading.
Trade Exit - How To Cut Losses And Let Profits Run
Cut your losses short and let your profits run. This is the essence of your trade exit rules.
Why Demo Account Performance Is Often Better Than Real Account Performance
Over the past several years, the popularity of online currency trading has grown substantially. Each day, online FX brokerage firms attract new investors - each of them lining up with a glint in their eye, lured in by promises of easy money. Most of these companies allow you to sign up for a free demo account which lets you place mock trades using their trading platform to get a feel for the excitement of currency trading. In the casual world of free demo accounts - many young traders find they are able to garner impressive profits without a significant amount of effort. It almost seems too good to be true. But transferring this success from a demo account to a real account is far less common. Why is this? The actual trading platform behaves the exact same way, the market doesn't care whether you're a demo or real trader - so what is different? It's you who has changed. Not your personality, not even your trading style - but the factors that affect you are different.
Momentum Trading: A Practical Day Trading Strategy to Get Profits from Hot Stocks
Momentum day trading can be extremely profitable when done correctly...
Forex Made Easy for Everyone
Forex made easy is as simple as you would want it to be. The foreign exchange market is a worldwide market and according to some estimates is almost as big as thirty times the turnover of the US Equity markets. That is some figure to chew on. Forex is the commonly used term for foreign exchange. As a person who wants to invest in the forex market, one should understand the basics of how this currency market operates. Forex can be made easier for beginners to understand it and here's how.
Internet and Computer Systems in the FOREX Business
With every passing year the interest in electronic trading is bigger, more especially trading shares and currency through Internet. A new profession came forward ? this of the currency dealer. The appearance of this profession was caused by the full force of development of Internet, which enabled the exchange business to be carried over at home or at the office. The electronic platforms offered by banks and investment brokers enables all of us to go in the sea of the financial markets and to start living a difference and unknown by this moment way of life.
New Opportunities with Forex Trading
The simplest definition of currency trading is the practice of exchanging one country's currency for another country's currency. Basically, currency trading involves four main variables: currencies, exchange rate, time, and interest rate. The interplay of these variables creates opportunities for small investors to obtain investment returns that are generally unheard of in the traditional investment world. It is also referred to as foreign exchange, FX or Forex, but the essence remains the same that currency trading is the exchange of one currency against another.
A Fools Game
I received an email this week with a question (below) which caused me to think about the wisdom of pursuing trading as a career. Regardless of your trading time span, the skills and concerns of active short-term trading are relevant to all market particpipants.
Forex Brokers - Helping to Maximize Your Success
A Forex broker is a broker dealing in foreign exchange, just like real estate broker who deals in real estate and properties. Simply, a Forex broker is an advisor who advises you about the forex market. However, the Forex market is not the perfect place to play with as a novice and beginner as there are many criticalities involved along with much risk bearing capacities. Novices can very quickly get their fingers badly burnt. But inexperience is not the only reason to consider using a Forex broker to trade in the high-risk international currencies market.
The Meaning of FOREX Price Charts and How to Use Them
There is one very important factor that you should consider with great care if you are willing to become a successful, profitable Forex trader. This ever important factor that must be always present in the trader's portfolio, is the ability to read the charts.
Crisis of Confidence in the EU
The European Union (EU) constitution was dealt a double blow, first by a French "no" vote on 29-May and then by a follow on "no" from the Netherlands on 01-Jun. To add insult to injury, one low level Italian diplomat quickly called for a referendum in Italy to decide if a return to the lira was warranted. Additionally, Prime Minister Tony Blair, who took over leadership of the EU on 01-Jul, indefinitely postponed the British referendum on the EU constitution.
|© Athifea Distribution LLC - 2013|