| |
| |
|
|
Currency Trading Information |
|
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 the fluctuation of exchange rates between major currencies (i.e., Trading the FOREX), nobody is going to ask you for a diploma, a formal license or verify the amount of hours you've spent studying the Foreign exchange market and banking 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 spot FOREX market can absorb trading sizes that dwarf the capacity of any other market. In fact, when compared with the $50 billion daily market for equities or the $30 billion futures market, it becomes quickly apparent this gives you, and millions of other FOREX traders, almost infinite trading liquidity and flexibility. 2): FOREX is a TRUE 24-hour market. The FOREX Market never sleeps. Trading positions can be entered and exited at any moment - around the globe, around the clock, six days a week. There is no waiting for an opening bell as in the case of trading stocks. It is a 24- hour, continuous electronic (ONLINE) currency exchange that never closes. This is very desirable for you if you want to trade on a part-time basis, because you can choose when you want 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 currencies trade in "pairs" (for example, US dollar vs. yen or US dollar vs. Swiss franc), one side of every currency pair (for example, USD/JPY - JPY = YEN) is constantly moving in relation to the other. Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other. Of course, it is up to you to choose the correct currency to be long or short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means you have equal potential 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 highly leveraged basis - up to 200 times your investment with some brokers. This is primarily attributed to the higher levels of 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 trade with just 0.5% margin -- in other words, just $50 allows you to control a 10,000-unit currency position. Futures traders, who are accustomed to margin requirements generally equal to 5%-8% of the contract value, will immediately recognize that the FOREX market provides much greater leverage, and for stock traders, who must post at least 50% margin, thereâ??s no comparison. If you are looking for an efficient use of trading 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 predictable cycles, creating trends. The strong trends that foreign currencies develop are a significant advantage for traders who use the correct "technical" methods. Unlike stocks, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80% of volume is speculative in nature and, as a result, the market frequently overshoots and then corrects itself. As a technically-trained trader, you can easily identify new trends and breakouts, which provide for multiple 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 do it totally commission-free! These brokers don't charge commissions to trade or to maintain an account, and that goes for all clients trading the FOREX through them, regardless of your account balance or trading volume. Even Mini FX traders can buy and sell currencies online, commission-free. What about trading fees? There are none of the usual fees to which futures and equity traders are accustomed -- no exchange or clearing fees, no N_F_A or S_E_C fees. Because currencies trade over-the-counter (OTC), via a global electronic network -- in FOREX, what you see is what you get, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage. In the equities markets, you must pay both a commission and exchange fees. The over-the-counter structure of the FX market eliminates exchange and clearing fees, which in turn lowers transaction costs. So, if FOREX broker don't charge commissions, how do they make money? Like all traded financial products, over-the- counter currency trading involves a bid/ask spread, which represents the prices at which your counterparty is willing to trade. Because the currency market offers round-the-clock liquidity, you receive tight, competitive spreads both intra-day and night. Stock traders can be more vulnerable to liquidity 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 trading environment. The greater the market transparency, the more efficient the market becomes. Unlike other markets where transparency is compromised (like in the Enron scandal), FOREX markets are highly transparent (i.e., analyzing countries, and having access to real-time research / news, is easier than companies). Because of this transparency, as an FX trader, you will be able to exercise risk management strategies in accordance to the fundamental and technical indicators we teach at RapidForex.com The FX market offers the highest level of market transparency out of all the financial markets. Because of this, order execution and fill confirmation usually occur in just 1-2 seconds. Markets that do not offer executable prices and force traders to absorb slippage obviously compromise the trader's profit potential considerably. In the forex world, order execution is all-electronic and because 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, and consequently, no delays. Omar Vargas
MORE RESOURCES:
Currency-Trading - Google News |
|
|
|
RELATED ARTICLES
Forex Trading Online - 7 Reasons Why You Should! Forex trading online is a fast way to use your investment capital to it's fullest. The Forex markets offer distinct advantages to the small and large traders alike, making Forex currency trading in many ways preferable to other markets such as stocks, options or traditional futures. 5 Questions You Need To Have Answered Before You Back-Test Your Forex System As 90-95% of new forex traders lose money within the first 3-6 months this article helps to guide new forex traders by asking 5 questions that the forex trader needs to know prior to back-testing their forex system.Let us jump right in. Writing A Trading Plan All professional traders have a trading plan. Trading futures is a zero sum game and those with a plan (and the discipline to apply it) will succeed over those that have no plan. Trading Profitably on the Foreign Exchange Market You may be asking yourself "how does one begin to trade profitably as a currency trader?".First, it is important to closely monitor foreign equity markets to attempt to predict or model how their respective currencies will perform against other currencies, ideally, currencies that are not very closely related, nor proportional, to the former currency. 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. 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. 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. Types of Foreign Currency Hedging Vehicles The following are some of the most common types of foreign currency hedging vehicles used in today's markets as a foreign currency hedge. While retail forex traders typically use foreign currency options as a hedging vehicle. The Seven Most Traded Currencies in FOREX. Currencies are traded in dollar amounts called "lots". One lot is equal to $1,000, which controls $100,000 in currency. Forex Training: Follow Your Gut or Your Broker Which way will the forex market move? Do you just follow your gut feeling? Or do you have Neo's sixth sense that would let you be one with the market and feel the underlying currents.Trading forex is a non stop action movie but a good one, where you really don't know who will win at the end. Day Trading - Moving Averages vs Support and Resistance When day trading the SP and Nasdaq futures, do you rely on your moving averages more than your support & resistant areas?During the first hour of trading, the support and resistance zones on the SP and Nasdaq futures are the most important things to watch. The moving averages have not yet had a chance to come into play. Commodity Trading - Advantages and Disadvantages What Is Commodity Trading?Commodity futures markets allow commercial producers and commercial consumers to offset the risk of adverse future price movements in the commodities that they are selling or buying.In order to work a futures contract must be standardised. 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. Disgruntled The following situation happens quite often to many traders. Look it over and see if it has been happening to you:You have been faithfully following your trading plan and the rules you've set for trading. 6 Critical Factors For Successful Trading Success in any profession can be broken down into a number of critical factors. Trading is no different. Day Trading the Index Futures - How to Judge Good Entries QUESTION: If the SP futures fall through support and go straight down for another two points, and I want to get short, should I a.)enter immediately, b. Forex2u Forex Strategy On Successful Forex Trading The essence of the FX2u Forex strategy is that it does not have any Forex trading system but could forecast the market trend accurately.Every set of Forex trading system available has its disadvantages. A Beginner's Guide to FOREX FOREX is the abbreviation for the Foreign Exchange market. FOREX is basically an international exchange market where currencies from all over the world are bought and sold for profit. Forex Broker Involvement Optional To trade on the forex market, the largest financial market on the planet, one must use a forex broker. Not unlike a stock broker, a forex broker can also makes suggestions about which moves to make when exchanging foreign currency. Forex Options Market Overview The forex options market started as an over-the-counter (OTC) financial vehicle for large banks, financial institutions and large international corporations to hedge against foreign currency exposure. Like the forex spot market, the forex options market is considered an "interbank" market.
|
|||||||||||||||
