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A Short Introduction To FOREX.
FOREX is the world’s largest and most liquid trading market. Many consider FOREX as the best home business you can ever venture in. Even though regular people have had the opportunity to take part in trading foreign currencies for profit (in the...
Emotions: A Trader's Worst Enemy; Get Rid of Fear and Greed - You'll be Glad You Did
Copyright 2005 Jonathan van Clute You hear it over and over and over in books, forums, and chatrooms. Fear and greed, fear and greed, fear and greed. Emotions are a trader’s worst enemy. What are we supposed to do about it? We are human after all....
Forex Pivot Points: Mapping Your Time Frame
It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is...
Hawala, or The Bank That Never Was
I. OVERVIEW In the wake of the September 11 terrorist attacks on the USA, attention was drawn to the age-old, secretive, and globe-spanning banking system developed in Asia and known as "Hawala" (to change, in Arabic). It is based on a...
The China Bubble
The China Bubble By William Cate Bubbles are good speculations. They are terrible long-term investments. If you sold your DotCom shares by March 2000, you did well. If you still own those shares, you are reading this article from the Poor House. If...
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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, you can get very valuable sources for this training at http://www.1-forex.com.
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, there's no
comparison. If you're 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 "technical" methods and strategies taught at the sources found in http://www.1-forex.com
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.
About the Author
FOREX Trader and Freelance writer.
http://www.1-forex.com
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