"How To" Start Trading The Forex Market? (part 3)
Martin Maier
More and more well informed investor and entrepreneurs are diversifying their traditional investments like stocks, bonds & commodities with foreign currency because of the following reasons:
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 $30 billion futures market, it becomes quickly apparent this gives you, and millions of other FOREX traders, almost infinite trading liquidity and flexibility.
2) FOREX is a True 24-hour market.
The FOREX Market never sleeps. Trading positions can be entered and exited at any moment around the globe, around the clock, 5.5 days a week. There is no waiting for an opening bell as in the case of trading stocks. It is a 24- hour, continuous electronic (ONLINE) currency exchange that never closes. This is very desirable for you if you want to trade on a part-time basis, because you can choose when you want to trade: morning, noon or night.
3) There is never a Bear Market in FOREX.
You can have access to a seamless exchange of currencies. Currencies trade in "pairs" (for example, US dollar vs. JPY (YEN) or US dollar vs. CHF (Swiss franc), one side of every currency pair (for example, USD/CHF) is constantly moving in relation to the other. Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other. Of course, it is up to you to choose the correct currency to be long ( you bought) or short( you sold).
4) High Leverage - up to 400:1 Leverage.
You are permitted to trade foreign currencies on a highly leveraged basis - up to 400 times your investment with Fenix Capital Management, LLC and with some other brokers.
Standard 100,000- US$ currency lots can be traded with as little as 0.25% margin, or $250.
Mini FX accounts are permitted to trade with just 0.25% margin, meaning, just $25 allows you to control a 10,000-unit currency position.
Futures traders, who are accustomed to margin requirements generally equal to 5-7%-8% of the contract value, will immediately recognize that the FOREX market provides much greater leverage, and for stock traders, who must post at least 50% margin, there's no comparison. If you're looking for an efficient use of trading , trade the Forex Market.
5) Price Movements might be Highly Predictable.
Currency prices in the FX market generally repeat themselves in relatively predictable cycles, creating trends. The strong trends that foreign currencies develop are a significant advantage for traders who use the "technical" methods and strategies. Unlike stocks, currencies have the tendency to develop strong trends. Over 80% of volume is speculative in nature and, as a result, the market frequently overshoots and then corrects itself. As a technically-trained trader, you can easily identify new trends and breakouts, to enter and exit positions.
6) YOU don't pay commissions or fees to trade FOREX
When you trade FOREX, through Fenix Capital Management LLC (FCM) you can do it totally FREE of commissions and fees , regardless of your account size.
Fenix Capital Management LLC, requires a very low minimum amount to open a brokerage account, only US$ 200 and they do not charge commissions or fees to trade or to maintain an account, regardless of your account balance or trading volume.
7) YOU don't have to pay trading fees or exchange fees.
There are none of the usual fees, which futures and equity traders are accustomed to pay:
NO exchange or clearing fees, NO NFA or SEC fees.
Because currencies trade over-the-counter (OTC), via a global electronic network, in FOREX, what you see on your trading screen, 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 equity and commodity 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.
8) HOW to Forex brokers make money if they don't charge commissions?
Like all traded financial products, over-the-counter currency trading involves a bid/ask spread, which represents the prices at which your counterpart is willing to trade. Your broker will receive a part of this bid/ask spread.
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.
9) 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 many recent scandals), FOREX markets are highly transparent (i.e., analyzing countries, and having access to real-time research / news, is easier than analyzing companies).
Because of this transparency, as an FX trader, you will be able to apply risk management strategies in accordance to your fundamental and technical indicators.
10) Instantaneous Order Execution
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.
In Forex, 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.( will be continued )
About the author:
Veteran Trader Martin Maier is the Founder of Fenix Capital Management, LLC, http://www.fenixcapitalmanagement.com. He is the developer of various futures and commodities trading programs and his systems have been ranked and rated by various large American Investment Profile Rating Companies such as STAR and MAR.
The latest information and news on Forex:
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Reuters
FOREX-Dollar little changed vs majors in volatile trade
Reuters
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Forex Hound
Daily GVI Forex Forex View
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WORLD FOREX: Dollar Weakens Slightly On Euro After Trade Data - Wall Street J...
RTT News
WORLD FOREX: Dollar Weakens Slightly On Euro After Trade Data
Wall Street Journal
NEW YORK (Dow Jones)--The dollar weakened slightly against the euro Thursday, after US data painted a mixed picture ...
WORLD FOREX: Dollar Gains Against Euro On US Trade DeficitWall Street Journal
all 25 news arti...
FOREX-Euro steadies vs dollar, yen; SNB awaited - Reuters
Reuters
FOREX-Euro steadies vs dollar, yen; SNB awaited
Reuters
LONDON, March 11 (Reuters) - The euro steadied against the dollar and yen in quiet trade on Thursday, recovering from earlier falls ...
WORLD FOREX: Euro,Dlr Down Vs Yen On China Tightening WorriesMarketWatch
WORLD FOREX: Euro Gains As Globa...
Forex Economics: US Trade deficit unexpectedly narrows in January. Weekly ......
Forex Economics: US Trade deficit unexpectedly narrows in January. Weekly ...
CountingPips
By CountingPips.com The United States trade deficit decreased unexpectedly in January as imports fell at a faster pace than exports, according to a release ...
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foreign exchange - Google News
Gold Has Less Luster in China - Wall Street Journal (blog)
Boston Globe
Gold Has Less Luster in China
Wall Street Journal (blog)
Now China's chief foreign-exchange regulator Yi Gang said Tuesday at a news conference during the National People's Congress that ?currently a few factors ...
China's Looking at Diversifying Foreign Exchange ReservesForex ...
Clear Channel Outdoor Reports Fourth Quarter and Full Year 2009 Results - Mar...
Clear Channel Outdoor Reports Fourth Quarter and Full Year 2009 Results
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Excluding the effects of movements in foreign exchange rates, revenue would have declined 14%.(1) Clear Channel Outdoor's operating expenses decreased 15% ...
Clear Channel Outdoor Holdings Loss Narr...
WW Grainger's daily sales up 12 percent in Feb. - The Associated Press
WW Grainger's daily sales up 12 percent in Feb.
The Associated Press
... Inc. said Wednesday that its daily sales rose 12 percent in February on acquisitions, seasonal product sales and favorable foreign exchange rates. ...
Grainger Reports February 2010 Sales ResultsMarketWatch (press release)
W.W....
SNB Leaves Rates, Swiss Franc Strategy Unchanged - Wall Street Journal
Earthtimes (press release)
SNB Leaves Rates, Swiss Franc Strategy Unchanged
Wall Street Journal
The freeze on rates and the statement on foreign exchange intervention were widely expected by financial markets. "The SNB is acknowledging that lending has ...
SNB Keeps Rates On Hold, Hikes Growth Fore...
Gold Pares Early Losses; Ends Flat - RTT News
Globe and Mail
Gold Pares Early Losses; Ends Flat
RTT News
Comments from the director of China's State Administration of Foreign Exchange early this week had already hinted at a possible slackening of demand. by RTT ...
Gold futures extend losses as dollar gainsMarketWatch
PRECIOUS METALS: Comex Gold...