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, there is 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.
Sri Lanka Rupee, Stocks Drop After Currency Trading Band Removed Bloomberg The central bank narrowed the currency's trading band against the dollar on Feb. 3 and Feb. 6 and today, prior to announcing its removal. The monetary authority raised benchmark interest rates for the first time since 2007 on Feb.
India Eases Currency Trading Limits for Some Banks Wall Street Journal By SUDEEP JAIN MUMBAI -- India's central bank has asked banks to approach it individually for relaxing some foreign currency trading limits and has already eased restrictions for some banks, a top official said Monday. "Some limits, based on their ...
iFOREX Adds Oil to its list of Tradable Commodities MarketWatch (press release) ROAD TOWN, Tortola, Feb 09, 2012 (BUSINESS WIRE) -- Leading currency trading company, iFOREX, has recently expanded its services, giving all Forex trading accounts direct access to oil CFDs. Targeting an audience that has little or no experience with ...
This January Azerbaijan's exchange currency trading totaled $82.5 million Azerbaijan Business Center Baku, Fineko/abc.az. The Baku Interbank Stock Exchange (BBVB) has renewed statistics of its operations. BBVB reports that in January 2012 the nine participating banks concluded 28 deals in 36 trading sessions in e-trading system (BEST).
FOCUS: Technology Buoys Retail Currency Trading, Reshapes Old Models Wall Street Journal By Eva Szalay Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Retail foreign-exchange trading is emerging as one of the biggest growth areas in the currencies space, and some of the trading firms that facilitate these flows are building up a whole new ...
Morgan Stanley Currency-Trading Head Stephen Mettler Leaves Bank BusinessWeek By Michael J. Moore Jan. 26 (Bloomberg) -- Stephen Mettler, who oversaw Morgan Stanley's interest rates and foreign-exchange trading businesses, has left the bank. Mettler, who joined the firm in 1997, retired, according to an internal memo obtained by ...
Bank of England and ECB Hold Steady, Indonesia Cuts CNBC.com [CNBC] ----------------------- MULTI CURRENCIES VS THE DOLLAR Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm. Learn more: The essential vocabulary for currency trading is on Key Currency ...
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Them A Mile Away
In recent years, investors have witnessed increased number
of investment opportunities and offerings. While the
complexity and success of these investment products vary,
technological innovation has made the Forex market one of
the fastest growth areas.
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.
Getting a Forex Trading
Education
Many Americans are interested in getting involved in forex
trading. Before doing this, you should get a forex trading
education.
E-currency Exchange
Trading
If you are reading this article you are probably one of the
many people who have spent countless hours searching for
unique ways to make money on the internet. Very few people
have gone on to succeed and most have failed miserably time
and time again.
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.
Trade Entry
Techniques
Most traders tend to concentrate on pinpointing the perfect
entry for a trade. However, in reality the entry price is
just one part of the equation.
Where to Get Forex
Training
For those of you who are interested in forex trading, you
may want to start off by getting some good forex training.
Forex training is a necessity for anyone with this
interest.
How To Handle A String Of
Losses
Everybody hates to lose and unfortunately no one is blessed
with the ability of foresight, therefore losses are an
unavoidable part of trading. When we enter a trade we will
either be right, or wrong, and even if we broke-even we'd
still be classed as being wrong - as nobody enters into a
trade just to break-even! When unsuccessful traders
encounter a string of losses they begin to engage in
self-destructive patterns that help them escape the pain
they are experiencing.
Choosing A Forex
Broker
With currency trading becoming ever more popular, the
number of brokers is growing at a rapid rate. What should
one look at when deciding which broker to open an account
with? These are the important points to consider.
A Look at Forex Market
Makers
The investor in the currency market takes for granted that
a pair of currencies can be bought or sold at a moment's
notice. Once an order is placed with a broker, the trade is
executed within seconds.
Exploring the World of
Day Trading
Are you looking into a career in day trading? In the past,
the tools for day trading were available only to
professionals. But thanks to the power of the Internet,
everything you need to get started is now conveniently
online.
Stock Market Report: Day
Trading or Swing Trading Online? Stock Investing
Information
Profitable day traders recognize that momentum trading is
among the fastest & most effective ways to harvest BIG
piles of cash in the stock market. The problem is that if
you don't know what stocks to look for and how to approach
them while limiting your risk, you won't even get close to
making some profits.
The Yin and the Yang of
Markets
I am reading a fantastic book on trading, first published
in 1924, by Richard D. Wyckoff, titled "How I Trade and
Invest in Stocks & Bonds".
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.
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.
Online Stock Trading:
Freedom of Trade
I remember the first time I started to trade online. It was
just before the tech bubble of the late 1990's and the
internet was still something new for most people.
Financial Crises, Global
Capital Flows and the International Financial
Architecture
The recent upheavals in the world financial markets were
quelled by the immediate intervention of both international
financial institutions such as the IMF and of domestic ones
in the developed countries, such as the Federal Reserve in
the USA. The danger seems to have passed, though recent
tremors in South Korea, Brazil and Taiwan do not augur
well.
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.
Intrenet Marketing VS
Forex Currency Trading
Have you noticed that when someone's trying to sell you
something - such as a system for making money - they always
make it look far easier than it is? Let's look at two
Internet businesses, almost as diametrically opposed as
it's possible to be - Internet Marketing and Forex Currency
Trading. You've probably heard the old Internet adage -
build a better website and they will come.
Online Futures Trading -
Advantages and Disadvantages
What Is Online Futures Trading? A futures contract is an
agreement to buy or sell a commodity at a date in the
future. Everything about a futures contract is standardized
except its price.
MORE RESOURCES updated Thu. February / 09 / 2012
