Forex trading holds significant differences to stocks trading. Understanding these differences will aid a trader in deciding the right market to enter. Forex trading itself has several advantages over stocks trading and is ideal for the beginner and individual small investors.
1. Low Transaction Costs for Forex Trading. There are no hidden fees for forex brokers as they are not paid by the traditional commission based fees. The fee paid to the forex broker is calculated directly from the trade in the form of the bid ask spread. In forex trading, the spread is the difference in how much you pay for a currency and how much you sell it for. This spread is commonly expressed in "pips" or points.
2. Forex Trading is a 24 Hour Market. Forex trading can be done anytime of the day, the forex market is open for business twenty-four hours a day. This is considered a huge advantage for individual small investors who are just starting out forex trading in their spare time. This allows forex traders to juggle their schedule around their trading opportunities; they can schedule their forex trading when it is convenient for them.
For those of you who are night owls and prefer to trade at 1am, then forex trading is just right for you. Depending on where you stay, there are banks opposite the globe open for you to trade.
3. Fast Trade Execution and High Liquidity in Forex Trading Trading forex means that you are trading in cash. No other form of investment has more liquidity than cash and as such, trades are executed almost instantly. There is no lag time in forex trading.
4. Having Leverage and Margin in Forex Trading One of the significant advantages that forex traders have is the ability to trade on margin. This gives them a huge leverage in their trading and presents the potential for extraordinary profits with relative small investments. Let's take for example; with a forex broker that allows a margin of 100:1, you can buy $100,000 in currency with only a small $1,000 deposit. A word of caution for the uninitiated, leverage can go both ways and may lead to large losses if you are not careful.
5. Forex Trading Requires Only a Small Sample to Study. Stocks trading present thousands upon thousands of stocks to trade. Small and large companies, international companies, newly issued IPOs etc. It is highly impossible to follow them all.
Forex trading, on the other hand, presents only seven major currencies to follow so that you can devote more time to each of them. Many successful forex traders do not even trade in all seven major currencies; they just choose three or four and master them to achieve success in forex trading.
6. No Bear Markets in Forex Trading. In forex trading, since you can trade either short or long, you will be able to make money whether the prices go up or down, that is if your predictions are accurate of course.
7. Forex Market is Not Easily Influenced. The forex market is so amazingly huge that no one individual, bank, fund or government body can influence it for a long period of time. Forex trading is the opposite of stocks trading where one negative television appraisal of a company's stock could possibly send it into a tailspin.
Based on the above advantages, forex trading is a clear winner for the beginner and individual small investors. If you are deciding on a form of trading to enter and master, then forex trading is the choice for you.
by Duncan Lee
Friday, November 10, 2006
Wednesday, November 08, 2006
What All Newbies Should Know About Forex Trading
Over the years, forex trading has rapidly become one of the hottest topics around town as a way for people to invest their money and get rich. But how does a beginner know if forex trading is right for them and that it will be a safe investment? Here are some crucial elements of forex trading that anyone interested should know about even before attempting it.
Forex trading (some call it FX trading), is actually short for foreign exchange trading. Forex trading is quite different from options, commodities or stocks trading. Among the investment realm, it is the easily the largest market in the world and promises huge profits for the brave investors.
Simply put, forex trading is just the selling and buying of currencies between different nations. Unlike commodities or stocks trading, money is not used to purchase a certain commodity or stock. You either lose or make money depending on the exchange rate between a pair of currencies in forex trading.
One of the main differences of forex trading is that the investment is not made in a single company or a band of companies. Forex trading is actually an investment in the economic wellbeing of a country. In forex trading, you are laying a bet that the general economy of one nation will improve with respect to that of another nation.
Let us use an example where you are trading between the US Dollar and the Japanese Yen. Your analysis of the situation appears to indicate an increase in the value of the US Dollar and therefore a rise in its price while the Japanese Yen will drop in value. You then decide to execute a trade to buy US Dollars and sell Japanese Yen. If your analysis is accurate and your predictions come true, then the US dollar will rise in value while the Japanese Yen drops and you will make a profit!
You may now be asking: "Is that all there is to forex trading?" Unfortunately, the truth is it is not as simple as that. Fluctuations in the value of different currencies are incredibly hard to forecast because there are many factors that can contribute to changes in exchange rates. An important aspect to remember in forex trading is that you are always trading in pairs of currencies. You will always be buying one currency and selling another, thus in order to make an accurate prediction, you must look at both nation's economy and not just one of them.
Of course, there is no need to restrict yourself to trading only one pair of currencies in forex trading. The forex market offers dozens of currencies to choose from, but if you are just beginning in forex trading has only started out, it is highly recommended that you trade the seven major currencies first:
USD - US Dollar
GBP - British Pound
EUR - the Euro
CHF - Swiss Franc
JPY - Japanese Yen
CAD - Canadian Dollar
AUD - Australian Dollar
A good advice for individual investors is to concentrate their forex trading on just these seven major currencies. Gaining a strong understanding and knowledge of the economic wellbeing of these countries as well as their currency trends will allow you to become a master of forex trading.
By Duncan Lee
Forex trading (some call it FX trading), is actually short for foreign exchange trading. Forex trading is quite different from options, commodities or stocks trading. Among the investment realm, it is the easily the largest market in the world and promises huge profits for the brave investors.
Simply put, forex trading is just the selling and buying of currencies between different nations. Unlike commodities or stocks trading, money is not used to purchase a certain commodity or stock. You either lose or make money depending on the exchange rate between a pair of currencies in forex trading.
One of the main differences of forex trading is that the investment is not made in a single company or a band of companies. Forex trading is actually an investment in the economic wellbeing of a country. In forex trading, you are laying a bet that the general economy of one nation will improve with respect to that of another nation.
Let us use an example where you are trading between the US Dollar and the Japanese Yen. Your analysis of the situation appears to indicate an increase in the value of the US Dollar and therefore a rise in its price while the Japanese Yen will drop in value. You then decide to execute a trade to buy US Dollars and sell Japanese Yen. If your analysis is accurate and your predictions come true, then the US dollar will rise in value while the Japanese Yen drops and you will make a profit!
You may now be asking: "Is that all there is to forex trading?" Unfortunately, the truth is it is not as simple as that. Fluctuations in the value of different currencies are incredibly hard to forecast because there are many factors that can contribute to changes in exchange rates. An important aspect to remember in forex trading is that you are always trading in pairs of currencies. You will always be buying one currency and selling another, thus in order to make an accurate prediction, you must look at both nation's economy and not just one of them.
Of course, there is no need to restrict yourself to trading only one pair of currencies in forex trading. The forex market offers dozens of currencies to choose from, but if you are just beginning in forex trading has only started out, it is highly recommended that you trade the seven major currencies first:
USD - US Dollar
GBP - British Pound
EUR - the Euro
CHF - Swiss Franc
JPY - Japanese Yen
CAD - Canadian Dollar
AUD - Australian Dollar
A good advice for individual investors is to concentrate their forex trading on just these seven major currencies. Gaining a strong understanding and knowledge of the economic wellbeing of these countries as well as their currency trends will allow you to become a master of forex trading.
By Duncan Lee
Forex trading made simple
The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events. The investor's goal in Forex trading is to profit from foreign currency movements. Forex trading or currency trading is always done in currency pairs. A problem with Forex trading have been that the platforms where you trade have been very difficult to use and understand, and not really user friendly for new traders. Quite recently however a new platform has seen the light of day that I believe will revolutionize this industry and open Forex trading to millions of new people worldwide. Pip Forex is the easiest, most original way to trade currencies you have ever seen. I believe its revolutionary simplicity will redefine forex trading - finally making forex accessible to anyone willing to take a few risks in order to generate profits. Why is Pip Forex so revolutionary?
Simplicity:
Unlike every other trading platform on the market, if you have 7 minutes to spare, you can learn how to trade currencies with Pip Forex. This unprecedented level of simplicity means that you can take advantage of the potential for profit from the world's most dynamic market more quickly than ever before. Transparency
One of the most revolutionary aspects of Pip Forex reveals itself in the way you trade. Traditionally, forex is traded on "margin". This means that you trade much larger sums than you actually have in your account, which causes confusion and uncertainty - and that has however been eliminated with Pip Forex. With Pip Forex, you decide how much you want to pay for each movement in the markets in real money. This means that if you decide to trade a Pip Price of 10, you are trading USD10 per Pip movement
Originality:
The makers of Pip Forex wanted to create a trading system that was completely unique to the tired world of forex. This originality is central to the success of Pip Forex and is one of key the reasons why people who are serious about making money through trading are turning to Pip Forex instead of traditional forex and spread betting.
by Martin L. Wear
Simplicity:
Unlike every other trading platform on the market, if you have 7 minutes to spare, you can learn how to trade currencies with Pip Forex. This unprecedented level of simplicity means that you can take advantage of the potential for profit from the world's most dynamic market more quickly than ever before. Transparency
One of the most revolutionary aspects of Pip Forex reveals itself in the way you trade. Traditionally, forex is traded on "margin". This means that you trade much larger sums than you actually have in your account, which causes confusion and uncertainty - and that has however been eliminated with Pip Forex. With Pip Forex, you decide how much you want to pay for each movement in the markets in real money. This means that if you decide to trade a Pip Price of 10, you are trading USD10 per Pip movement
Originality:
The makers of Pip Forex wanted to create a trading system that was completely unique to the tired world of forex. This originality is central to the success of Pip Forex and is one of key the reasons why people who are serious about making money through trading are turning to Pip Forex instead of traditional forex and spread betting.
by Martin L. Wear
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