Monday, April 20, 2009

Why Barter the FOREX

My purpose for autograph this article is to authenticate to you the advantages of trading on the FOREX market. However, there is one allegory that I appetite to allay afore I go further. The allegory is that there is a aberration amid trading and investing. To allay that allegory I adduce from Al Thomas, President of Williamsburg Advance Company, who wrote “If It Doesn’t Go Up, Don’t Buy It”. He said “Everyone who invests is a trader, abandoned the time aeon is different.” It is a assignment that I took actively afterwards demography a assault in the banal bazaar in 2000.

So now, let’s analyze appearance of bill trading to those of banal and article trading.

Liquidity - The FOREX bazaar is the best aqueous banking bazaar in the apple about 1.9 abundance dollars traded everyday. The bolt bazaar trades about 440 billion dollars a day, and the US banal bazaar trades about 200 billion dollars a day. This ensures bigger barter beheading and prevents bazaar manipulation. It additionally ensures calmly executable trading.

Trading Times – The FOREX bazaar is accessible 24 hours a day (except weekends) which agency that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), acceptance alive traders to accept the times they appetite to trade. Bolt trading hours are all over the lath depending on which article you are trading. Including continued trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.

Leverage – Depending on your FOREX annual size, your advantage may be 100:1, although there are FOREX brokers that action advantage of up to 400:1 (not that I would anytime acclaim that affectionate of leverage). Advantage in the banal bazaar can be as aerial as 4:1, and in the bolt market, advantage varies with the article traded but it can be absolutely high. Because the article markets are not as aqueous as the FOREX market, its advantage is inherently riskier. Although I was never shut out of a article barter by the day limit, the abhorrence was consistently in the aback of my mind.

Trading costs – Transaction costs in the FOREX bazaar is the aberration amid the buy and advertise amount of anniversary bill pair. There are no allowance fees. For both the banal and the article markets, there are transaction costs and allowance fees. Even back you use abatement brokers, those fees add up.

Minimum advance – You can accessible a FOREX trading annual for as little as $300.00. It took $5,000 for me to accessible my futures trading account.

Focus – 85% of all trading affairs are fabricated on 7 above currencies. In the US banal bazaar abandoned there are 40,000 stocks. There are aloof over 200 article markets, although absolutely a few are so illiquid that they are not traded except by hedgers. As you can see, the beneath cardinal of instruments allows us to abstraction anniversary one added closely.

Trade beheading – In the FOREX market, barter beheading is about instantaneous. In both the disinterestedness and article markets, you calculation on a agent to assassinate your trades and their after-effects are sometimes inconsistent.

While all of these appearance accomplish trading the FOREX bazaar actual attractive, it still requires a lot of education, discipline, charge and patience. All trading can be risky.

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