The Advantages of Forex Trading
There are many different instead of futures or stocks. The advantages are what makes this type of trading so popular. These advantages are where you will find the greatest comfort in trading Forex and they are:
1. Lower Margin
Just like with futures and stock speculation, a forex trader has the ability to control a large amount of the currency basically by putting up a small amount of margin. However, the margin needs for trading futures are usually around 5% of the full value of the holding.
What this means is that trading forex, a currency trader’s money can play with 5-times as much value of product as a futures trader’s, or 50 times more than a stock trader’s.
When you are trading on margin, this can be a very profitable way to create an investment strategy, but it’s important that you take the time to understand the risks that are involved as well.
2. No Commission and No Exchange Fees
When you trade in futures, you have to pay exchange and brokerage fees. Trading forex has the advantage of being commission free. This is far better for you. Currency trading is a worldwide inter-bank market that lets buyers to be matched with sellers in an instant.
You are going to have to compare both online forex and your specific futures commission charge to see which commission is the bigger one.
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3. Limited Risk
When you are trading futures, your risk can be unlimited. For example, if you thought that the prices for orange juice were going to continue their upward trend, just before the Florida Hurricanes. The price for it after that fell dramatically, which moved the limit down several days in a row. You would not have been able to leave your position and this could have wiped out the entire equity in your account as a result. Because the price just kept on falling, you would have been obligated to find even more money to make up the deficit in your account.
4. Position Rollover
When futures contracts expire, you have to plan ahead if you are going to rollover your trades. Forex positions expire every two days and you need to rollover each trade just so that you can stay in your position.
5. 24-Hour Marketplace
With futures, you are generally limited to trading only during the few hours that each market is open in any one day. Forex, on the other hand, is a 24/5 market. The day begins in New York, and follows the sun around the globe through Europe, Asia, Australasia and back to the US again. You can trade any time you like Monday-Friday.
6. Free market place
Foreign exchange is perhaps the largest market in the world with an average daily volume of US$1.4 trillion. That is 46 times as large as all the futures markets put together! With the huge number of people trading forex around the globe, it is very hard for even governments to control the price of their own currency.
There are a lot of forex trading software online available which can make you a lot money. Take just the right one.
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Mirko van Anken -
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You can find unbiased product and consumer reports on a wide range of forex trading software, courses and brokers. Just search and find the program that fits to you:
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Tags: buy-foreign-currency, currency Trading Basics, easy, forex, forex trading software online, fx Trading Online, fx trading software, made
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February 11th, 2010 at 12:35 am
sisyphus,
the following are some of the reasons i could share with you why trading forex is advantageous compared to stocks;
*forex is traded 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT)
*liquidity – there are always buyers and sellers to trade with
*forex is often traded without commissions which makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis.
*leveraging – with a minimum account of USD 10,000, for example, you can trade up to USD 500,000.
*profit potential- there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency.
for more info, you may check this site and register to download a Free Forex Ebook and a Free $50k Practice account as well. all the best.
February 11th, 2010 at 12:37 am
I bet you are thinking… hmm… maybe I can escape from paying some tax? I don't think so… as a US citizen you are obliged to pay tax whereever you make your money.
Unless you make a company offshore.. another legal entity and set it up so you are an employee… etc etc..
February 11th, 2010 at 1:23 am
HI !
Your problem is called spread. Spread is the difference between bid and ask price. Spread price depends on a brokerage company.
If you wan to learn more you may want to check out some course so you wont loose more money.
I suggest forexonlinecourse.com. And help with your trading check out forexonlinesignals.com.
February 11th, 2010 at 8:49 am
They change large amounts of money at once, and wait for the currency to go up, and trade back. E.G:
I have £10,000 and change all that into Indian rupees. The rupee rate for £1 is 85rupees. So I get 850,000 Indian rupees. So when the rupees go down to say 75 rupees for £1, you swap all your money back, and make a nice little profit.
February 12th, 2010 at 6:06 pm
Both are risky. Forex is even more riskier because of the amount of political factors involved.
Both should be avoid by beginners. Be an investor, not a speculator.
February 12th, 2010 at 7:36 pm
Dude stay away,
you can lose 80% in one day just as easily.
February 13th, 2010 at 8:09 am
Hi
Going to college is a privilege, and If her education meant that much to her, she would not waste her money. Instead, she would spend it on her tuition. I think she is just using you. Make her pay for her laptop and tuition. Just because you are married to her, it does not give her the right to use you like this. If you don't tell her how you feel about this, it will continue to bother you. Tell her that she should contribute to paying for her tuition. You are married, and you should at least pay the tuition and car payment together by splitting the cost between the two of you.
February 13th, 2010 at 12:06 pm
You take a "Forex position" when you enter the Forex market buying or selling a specific currency pair at a specified price. The size of the position is determined in "lots" or units. For instance, lets imagine that you have a Forex account that you funded with U.S. Dollars. The first trade you decide to take is to buy 100,000 units of EUR/USD. At the moment you buy those 100,000 Euros you simultaneously sell the difference in the exchange rate in Dollars (136,000 approximately). If the price of the EUR/USD at the moment you bought was 1.3600 you now hold 1.0 lot (commonly referred to as 1 standard lot or 100,000 units) of EUR/USD long. If the value of the EUR/USD climbed to 1.3700 and you exited (or converted your euros back to dollars) you would have made $1000.
I am sure, you now have many more questions. I believe it would be much easier if you took one of the free Forex courses online. The easiest is http://www.babypips.com/school but you can google to find others if you prefer.
As for the advantage of Forex now over other asset classes. Well, the biggest advantage is that there is no such thing as a bullish or bearish Forex market. You can make money Forex, no matter the market condition if you know what moves the currency market, take a disciplined approach to trading the market, and have a solid trade/cash management strategy.
As for the claims by many that Forex is a "scam," let me say this. Do people lose money in Forex? Sure. Are there companies out there willing and able to steal money from unsuspecting Forex newbies? Absolutely. But if you are careful, smart and educate yourself about Forex you will be fine.
The potential in the Forex market is unlimited – but the dangers are also great. Take your time. Don't rush into it. Find a few mentors and you can make it.
February 13th, 2010 at 8:59 pm
I would agree that many Forex classes are a waste and time, especially considering how much they often cost.
You are right in your basic assessment of what the Forex market is, and have highlighted many of the elements necessary to trade it. However, the most important component in the Forex market – or any other market, in fact – is to have an edge that you believe will allow you to profit over a period of time. Many of those tools that you mentioned can help capture that edge, but you need to have a firm understanding of why you are using some – if any – of the tools you mentioned, before you go about using them. This, unfortunately, is the hardest part of trading successfully: consistently capturing a market inefficiency enough to profit.