April 2010

Forex and Daytrading

The best way to keep up with the latest on forex is to constantly stay on the lookout for new information. Current info is not always the easiest thing to locate. Fortunately, this article includes the latest available.

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Online trading is great way for serious investors to make money, but inexperienced traders often wind up with big losses. A good set of instructions can minimize the risks and save months of expensive trial-and-error learning.

Day Trading

Day Trading had its heyday during the bull market of the 1990’s. All the amateurs have since dropped out, but day trading is still being practiced by professionals. There are fewer opportunities in the current market, but skilled investors can still find them if they know what to look for.

FOREX Trading

The Foreign Exchange Market (FOREX), the world’s largest financial exchange market, originated in 1973. It has a daily turnover of currency worth more than $1.2 trillion dollars.

Unlike many other securities, FOREX does not trade on a fixed exchange rate; instead, currencies are traded primarily between central banks, commercial banks, various non-banking international corporations, hedge funds, personal investors and not to forget, speculators. Previously, smaller investors were excluded from FOREX due to the huge amount of deposit involved. This was changed in 1995, and now smaller investors can trade alongside the multi-nationals. As a result, the number of traders within the FOREX market has grown rapidly, and many FOREX courses are appearing to help individual traders increase their skills.

As a matter of fact, it’s advisable to take FOREX training even before opening a trading account. It is vital to know the market mechanics of FOREX, leveraging in FOREX, rollovers and the analysis of the FOREX market. Due to this fact, potential FOREX traders would do well to either enroll in a FOREX training courses or even purchase some books regarding FOREX trading.

There are pros and cons to enrolling into a FOREX course. For beginners a FOREX course is a rapid method of learning the basics of FOREX trading. Not much time is spent on history of the market or arcane economic theories. Often, on-line or phone support from a skilled FOREX trader is available to answer any questions. Also, the information is condensed and practical, often with graphs and charts.

The disadvantage is the price, as courses are more expensive than a paperback from the bookstore. Also, the course may just teach the approach of the trader who wrote it, and individuals have different trading strategies. The student may grow accustomed to the logic and focus of the teacher without coming to realise that nothing is predictable in the FOREX market, and many different strategies will bring profits in varying market circumstances. Also, knowledge of practical applications may not be enough, as the FOREX is highly unpredictable and there are many external factors, such as political issues, affecting the flow of finances in the market.

The best advice would be to do some background research on the FOREX market first, and then enroll in a course.

About the author:

Frank Hague has always been interested in the Stock Market. http://www.forex-now.info – http://www.lazytrader.com – http://www.business-software-now.info – http://www.accounting-software-now.info

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Hopefully the sections above have contributed to your understanding of FOREX. Now might be a good time to write down the main points. The act of putting it down on paper will help you remember what’s important.

Of course, it’s impossible to put everything into just one article. Even if you don’t know everything about FOREX, you’ve done something worthwhile: you’ve expanded your knowledge.

The Benefits Of FOREX Over Stocks

For hundreds of years Stocks have been a popular investment. Companies issue stocks to raise capital for expansion and new projects. Each share of the stock represents a partial ownership in the company.

When the company does well and makes a profit, the value of the stocks rise. Stock owners can sell their shares for a profit, or hold on to the stock for even more gain in the future. Sometimes companies will issue dividends — part of the profits that are distributed to share holders.

Stock Exchanges

Stocks are traded on stock exchanges. Most stocks are bought and sold through brokers who charge a commission or fee for this service. United States stock exchanges include the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). Most stocks are listed only on 1 exchange, although large companies may have listings on multiple exchanges.

Long-Term To Day Trading

Stocks were traditionally seen as long-term investments. So-called “blue chip” stocks, those having proven value over many years, may form the backbone of an investment portfolio.

Short-term trading is a relatively new phenomenon in stock trading made possible by the advent of the Internet. Day traders attempt to take advantage of large daily fluctuations in the market by buying and selling many times in a single trading period. This is relatively risky, and any profits are reduced by the broker commissions charged on each transaction.

FOREX

The Foreign Exchange Market (FOREX) is quite different from the stock exchange. In contrast to the stock exchange, the FOREX is primarily a short-term market. Most traders enter and exit deals within a 24 hour period — sometimes within a few minutes. Many FOREX trades can be made in 1 day without building up a large brokerage fee, because FOREX trades are commission-free. Brokers earn money by setting a spread — the difference between asking and selling prices.

The FOREX is the largest financial market in the world. It handles transactions worth $1.5 trillion every day. By comparison, all the American stock exchanges combined handle daily transactions worth about $100 billion. The huge volume of FOREX allows it to be 1 of the most liquid markets in the world. There is always a buyer and seller for any type of currency, because the world economy relies on the movement of goods from country to country. The stock market is less liquid because participants may choose to hold their investments indefinitely or move on to other markets.

Non-Stop Trading 5 Days A Week

The FOREX is not based in any 1 location. Trading markets are located worldwide and, because of time zone differences, trades can be made 24 hours a day, 5 days a week. Trading begins in Sydney, Australia, on Monday morning (Sunday afternoon New York time) and continues non-stop until Friday afternoon New York time. Stock exchanges have more limited trading hours. While it is possible to trade on exchanges worldwide, each exchange is independent and operates for just 7 hours a day. It is not possible to buy or sell a certain stock that is traded only on 1 stock exchange when that exchange is closed.

Other advantages of FOREX are:

it is more predictable than stocks; it follows well-established trends.

it allows high leverage — typically 100:1 as opposed to 2:1 on the stock market

it doesn’t require a large investment — mini accounts as small as $250 can get you started in FOREX.

Three Important Forex Concepts for New Traders

The best way to keep up with the latest on FOREX is to constantly stay on the lookout for new information. Current info is not always the easiest thing to locate. Fortunately, this article includes the latest available.

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As you enter the world of Forex you will find yourself learning and using many new concepts that you may not have used or heard before.

Three of this important concepts that you must understand are what “Pips” are, What “Volume” is and what you do when “Buying” and “Selling Short”. They may look more like four concepts but Buying and Selling are like the two faces on the same coin so we can consider them as a single concept.

Lets first introduce what Pips are. Maybe you have heard or read already how many pips a day you can make using some trading system. In short, currency pairs prices will go out to 4 significant digits. For example; if one currency pair is trading for 1.3451 then an increase to 1.3452 would be a “one-pip” increase in the price of this particular currency. This is an increase of one hundredth of a percent of the value of the currency pair you are trading. And depending the type of account you have, regular or mini, each pip will have a value of $10 or $1. So if you make 10 pips a day with a regular account you would have made $100 and with a mini-account $10.

Now we can talk about the Volume; trading Volume is a quantity that tells traders how much money is being traded at one particular moment. And the forex market is known by its high volume of trading during most of the time markets are open. Some times there can be spikes in the volume during some type of news breaks and during the time New York stock exchange is open. The volume of transactions in Forex, even in a slow day, will always be much higher than the volume traded in other large exchanges at their full capacity.

Now maybe the most obvious of the concepts. Buying refers to the acquisition of a particular currency pair to open a trade. Selling short refers to the selling of a particular currency to open a trade. When you Buy, you are expecting the price of the currency pair to increase with time, i.e., you buy cheap to sell high. In the case of Selling short, it looks a bit more complicated. Here the way to make money is to initially sell a currency pair that you think will lose value in a given period of time and then, once it happened, you will buy it back at the new price but now you can sell it at the previous greater price the currency had when you opened the trade, so you earn the difference in prices. I know it seems kind of tricky, but once you are in front of your trading station it will look much simpler.

Understand well these three concepts and you will start with solid steps you trading career.

About the author:

Adrian Pablo is a freelance writer with articles published in a number of places. Get a free report on Fibonacci Trading and learn more about the world of trading , visit:

http://www.1-forex.com

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Hopefully the sections above have contributed to your understanding of FOREX. Now might be a good time to write down the main points. The act of putting it down on paper will help you remember what’s important.

Of course, it’s impossible to put everything into just one article. Even if you don’t know everything about FOREX, you’ve done something worthwhile: you’ve expanded your knowledge.

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