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An Explanation of Forex Trading
Forex trading means the simultaneous buying of one currency, and selling of another. The currency of one country is exchanged for that of another. The currencies are always traded in pairs such as US Dollar/Japanese Yen (USD/JPY), Euro/US Dollar...
Choosing eCurrency Exchange Training Courses - What Should You Look For?
Trading eCurrencies on the DXInOne marketplace often has a steep
learning curve for most people. Sure, there are the few that can
pick it up without any direction but I would not be surprised if
these people had prior trading experience in...
DXOut E-Currency Exchange Program and Free Training
Copyright 2005 East Tech LLC
I’m sure you’ve heard about DXInOne and the E-Currency Exchange business by now. There are dozens of online marketers taking full advantage of this opportunity by promoting their very expensive courses that can cost...
Forex basics: make money with money, part 1
FOREX or The Foreign Exchange market refers to an international exchange market where simultaneous buying of one currency and selling of another is done. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen...
Forex Trading
The foreign exchange market, also knows as FOREX, originated in 1973 has become the largest e-currency trade market in the world today. FOREX trading occurs 24 hours a day, 5 days a week. The FOREX market offers a unique trading opportunity to those...
Forex Trading - Opportunities for Individuals
Indeed large multinational and individual banks and other major financial institutions have dominated FX trading (also known as Forex trading), but there is a paradigm change in the nature and type of investing. According to one estimate, in the new...
Is Trading E-Currency a Legitimate Business?
When I first came across the e-currency trading business on the advice of a friend, I didn't take the opportunity very seriously. It appeared to be just another "hyped up money making scheme." From what my friend was telling me it seemed too good to...
Mazu E-currency Exchange
If you are like many of the thousands of people trying to make money online today, then you are probably trying to find a program that works. I have tried Quixstar, Market America and Amway, all of which require you to build a down line and sell a...
The Forex Trading System
The Forex trading system was first created in the 1970's. The
word means "foreign exchange market" where the different
currencies of the world are freely bought and sold on the
market. Global Forex Trading is leading the world in...
Your Guide To Successful Forex Trading
If you were wondering; forex trading is nothing more than direct access trading of different types of foreign currencies. In the past, foreign exchange trading was mostly limited to large banks and institutional traders however; recent technological...
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5 Reasons to Trade Forex Instead of Stocks
While Forex trading is becoming more popular in the United
States, the vast majority of investors still do not understand
the massive advantages offered in the foreign currency market
when compared to equities or fixed income trading. When you
fully grasp the following concepts, you'll understand why you
might want to reconsider your current investment strategies.
1. Currency prices are not heavily influenced by
institutional investors. In stock trading, there is a
limited amount of volume on a daily basis. Each stock has a
specific number of shares on the open market and trade prices
are governed by the number of people attempting to buy or sell
shares at a specific point in time. This makes the market
vulnerable to price swings when a large investor is attempting
to buy up or unload large amounts of shares. For example, if
some pension fund owns 10% of a company and suddenly decides to
liquidate their position, the market is now flooded with sell
orders. Since the amount of shares attempting to be sold will
outnumber the amount of buy orders, the price of the stock will
start to drop as the number of buyers days up. This creates
losses for the remaining shareholders. On the other hand, the
forex market is so massive and has so many investors that no
single investor can possibly have a major impact on pricing.
There are too many units of Euros, Dollars, Yen, etc for any
single institution to hold even close to a controlling interest
in any currency.
2. Margin requirements are significantly lower in forex
trading than equity trading. While the exact amount of
margin allowed is determined by each broker, the restrictions
are usually much less stringent when trading forex. Margin
allows the investor to "play with house money." In essence,
you're borrowing money from the broker to invest in your own
account. While this can be risky, it can also be insanely
profitable. For example, let's say you have $10,000 of your own
money to invest. If you open up a margin account at an equity
broker, you can usually margin up to 50% of the value of stock.
So if you buy $10,000 in Microsoft stock, you can borrow another
$5,000 to own a total of $15,000 in value. With your forex
account, the margin requirement is often as low as 1%. Which
means that if you buy $10,000 in Euros, you can use your
broker's money to buy another $1,000,000. So you now own over $1
million in Euros. Now lets say that the value of each investment
increases 10%. Your $15,000 in Microsoft stock is now worth
$16,500. You sell it, pay back the $5,000 you borrowed, and you
pocket $1,500 in profit (minus any fees or interest). Your
return on investment is 15%. If your Euros went up 10%, your $1
million is now worth $1.1 million. After selling and repaying
your broker, you profit $100,000 before any
interest. That's a
return on investment of over 1,000%. Of course, you need to be
extra careful when trading on margin. Imagine if the transaction
went the other way. You'd be in a much bigger hole in the forex
scenario. But the potential for enormous gain is there and is
one of the major reasons why forex trading is so attractive to
serious investors.
3. Forex trading is open 24 hours a day. Unlike the U.S.
stock markets, you can trade forex any time of day from Monday
through Friday. If a major news story breaks when you're holding
stock, and it's after hours, you're stuck holding onto your
position until the market opens the next day. By the time this
happens, everyone else knows the news and there's thousands of
buy/sell orders waiting when the opening bell rings. This will
dramatically influence your trade price and negate any advantage
you might have had by being one of the first to react. Keep in
mind that many corporations withhold major news such as earnings
reports and personnel moves until after the market closes. They
do this to minimize emotional trading, which is smart for them
to do but also hurts savvy investors. Since Forex trading is
open 24 hours, you can place your trade order whenever major
events occur.
4. The foreign exchange market is more liquid than the equity
market. Forex is the largest market in the world. Every day,
an average of $1.4 trillion dollars is traded, and the amount of
securities (foreign currencies) is minuscule when compared to
the number of companies traded in the equities market. This
means that there are always buyers to be matched with sellers,
which means that you'll have a much better chance to get a fair
and accurate price on your trade than if you were trading a low
volume stock where the bid and ask spreads can be very large.
5. Forex trading offers the advantage of limited risk.
This is one of the large advantages over the futures market.
When you buy a futures contract, you are obligated to buy or
sell a specific amount of a specific commodity at a specific
time for a specific price. Which means that if disaster hits,
you're out of luck. For example, lets say you buy a futures
contract to sell corn. If news breaks that reports an outbreak
of deaths caused by a pesticide used in corn crops, the price on
your contracts will drop through the floor, limits will drop,
and you could be stuck in your position and end up taking
massive losses. This would not happen in the forex market since
you can leave your position at any time.
About the author:
This article is just a small piece of the free Forex Trading Course at
forexgameplan.com. Go learn about this incredible market and
sign up today while the 30 day course is still free.
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