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Reasons to get into Forex Trading Reasons to get into Forex Trading(0)

Trade Any Time Everyday with Forex

The Forex market is almost a flawless 24-hour market, based on the availability of liquidity. Forex trading at FXCM starts from Sunday 5:15 p.m. ET and goes on till 4:55 p.m. Friday. Customer service for FXCM is open 24/7 and orders placed previously can be filled till 5 pm ET. Currency traders have the option to customize their trading timetable with the facility to trade around the clock. It is possible to get in as well as out of this market whenever they want without a wait for opening bell or any market break. It is true that it is possible to trade stocks following the typical market hours, there is a chance of negation with less order flow or an extreme broadening of the bid-ask spread.

No Need to Pay Commissions

Typically the costs in the Forex market are restricted to the bid-ask spread. No commission is charged by FXCM as it is remunerated via a mark-up that is included in the spread that it gets from its liquidity offered through the FX Trading Station.

FXCM can even get reparation from its liquidity providers for the order flow. You don’t have to pay any commission to FXCM for standard accounts, but commission cost can be relevant for particular class of non-standard accounts including Active Trader.

It is Easy to Access Forex Market Information

There are plenty of stocks as well as information on stocks.  To locate good trading chance in the equities markets, it can mean going through thousands of stock data, on the other hand a Forex trader has to just research six key currencies. Other than that the important information that propels the equity markets, like profits and revenues can be complicated and may even be prone to deception, insider trading and fraud. While almost all the news that moves the Forex market is reports dispersed publicly by research institutions or governments and is apparent.

It is true that the knowledge gained while analyzing stocks can also be easily shifted into the Forex market. The currency markets are affected by a number of economic indicators common to equity traders like interest rates and payroll data.  There are several technical traders who find the Forex market to be especially particularly lucrative as currencies react well to several universal technical indicators like Candlestick charting, MACD and RSI.

You can learn more about shifting to Forex trading from trading equity markets from FXCM staff.

Lower Forex Commissions

Lower commissions are offered by the Active Trader Group for high-volume traders. It is possible to gain from this pricing on all FXCM platforms. In case you decide to trade via the Active Trader platform you will get a look at the liquidity available at every price band. The added transaction cost of the Active Trader program including spreads plus commissions typically is quite less compared to the cost of transaction (spreads) accessible on a classic FXCM standard account.

Remember Forex Trading Can Be a High Risk Investment

There is a high level of risk when trading margin carries or foreign exchange and may not be appropriate for many investors. There is a high level of leverage that can work for as well as against you. Before you take a call trade Forex, think about your risk appetite, investment objectives and experience level cautiously. There is a fair chance of sustaining some or even complete loss of your initial investment which suggests that it is best not to invest cash which you can’t afford to lose. It is best to be conscious of the various risks linked with foreign exchange trading and take the advice of a financial advisor in case you have questions and doubts.

Why Trade on Forex Markets Why Trade on Forex Markets(0)

The Benefits of Trading in Forex

You will find that trading in Forex is different from the other forms of trading. Let us examine the advantages and disadvantages of trading in Forex as compared to the Stock Market.

You can trade 24 hours in a day.

Forex market is open round the clock. Forex trading is offered by Forex Capital Markets (FXCM) from 5:15 pm on Sunday to 4:55 Pm on Friday. The Client Service of FXCM is accessible 24 x7.  The advantage of Forex trading is that there is no opening or closing bell or a gap in markets. This enables you to enter and exit the Forex trading at any time and customize your trading schedule.

There are no commissions to be paid.

Since Forex trading is confined to the bid-ask spread, it does not charge any commissions.  The FXCM is compensated by the mark-up which is added to the bid-ask spread received from liquidity providers.  FXCM also can get compensation from the order flow.  Commission may, however, be charged to certain classes of accounts such as Active Trader.

The information on Forex is more reliable.

When you are dealing with stock market, you would need to analyze the data from thousands of stocks for doing the trading in a proper manner.  As far as Forex trading is concerned, you only need to keep track of six major currencies of the world. Another problem with the stock markets is that a large portion of the data available on companies may not be correct and it is easy to get deceived by fraud and insider trading. In Forex market, all the data about currencies are available in public domain and most of the research is done transparently by reliable government and other research institutions.

Experience in Stock Trading is useful in Forex Trading.

Your expertise in Stock Trading can be used beneficially in Forex Trading also.  The commonly used economic indicators in stock trading such as payroll data and interest rates also are relevant to Forex Trading.  Also the technical indicators such as Candlestick Charting, MACD, RSI etc. are pertinent in Forex trade also as currencies also appear to respond to these indicators.

Forex is not suitable for all traders

The level of risk in Forex trading is high as compared to stock market.  Since you are given a higher amount of leverage the loss can also be higher sometimes.  The factors to consider before venturing into Forex trade are your risk appetite, investment objectives and also level of experience. It would be prudent to take the help of a financial advisor before committing funds to forex trading.

How to Maximize Profit of Forex Currency Trading How to Maximize Profit of Forex Currency Trading(0)

How to Make Profit on Trading Currencies 

There can be a couple of meanings of currency trading and if you are interested in learning ways to save money and time in currency transfers you can take a look at  Trade Money Transfers from XE. Here we will talk about currency trading which deals with selling and buying currency in the Forex or foreign exchange market for making money.

Currency Trading the Fundamentals of Forex 

Currency exchange rate is basically the rate at which one currency is swapped for another. Typically the citation is in pairs such as EUR/USD or Euro and US Dollar. There is fluctuation in exchange rates based on several economic factors such as inflation, geopolitical events and industrial production. They influence selling as well as buying currency pairs.

Forex Trade Example  

The EUR/USD rate symbolizes the amount of US Dollars one Euro will buy.  If you think that there will be an increase in the value of Euro against the US Dollar you buy Euros by way of US Dollars. If or when there is an increase in the rate of exchange, you can sell Euros to make profit. You have to remember that trading Forex entails very high danger of loss.

Why Choose to Trade Currencies? 

Forex is among the largest markets in the world with more than 3.2 trillion US dollars being traded everyday and is a 24-hour action market.

There are some important variations between Forex and Equities market including:

  • Several agencies don’t charge fee for Forex trading and you just have to pay for the ask/bid spreads.
  • 24 hour trading allows you to dictate how and when to trade.
  • Trading can be done on pull, but this will enhance potential losses and gains.
  • Concentrate on buying from just some currencies compared to over 5000 stocks.
  • It is easy to access Forex and not much capital is needed to start.

Why Currency Trading Is Not For Everyone

There is a high level of risk in trading foreign exchange which may not suit all investors. You must consider your objectives for investment, risk appetite and experience level carefully before taking up foreign exchange trading. It is possible that you suffer the loss of all or some of your initial investment so you must not invest cash which you can’t lose. In case of doubts, it is best to take advice of trusted financial advisors.

7 Important Forex Trading Tips 7 Important Forex Trading Tips(0)

Tips you Should Know Before Jumping into Forex Trading

1. Gamblers visit the casino but unproved and spontaneous Forex trading actions is also similar to pure gambling. Your attempt to trade without studying and analysing the market is comparable to a game that can be fun till you lose real cash.

2. It is best to practice on a Forex Demo account before investing into an actual Forex account. Give a minimum of 2 months to demo trading. In fact 90% of all starters are not successful in the actual cash market owing to lack of discipline, knowledge and practice.
The remaining 10% of the successful traders are those who have been sharpening their expertise on demo accounts for several years before playing in the real game. A good demo practicing account like FXGame from Oanda will be helpful for beginners.

3. Move with the trend as this is your friend. Trade with the movement which maximizes your probability to succeed. If you trade against the trend it may not “kill” you but will surely need concentration, stress as well as intelligent skills to achieve lucrative trading objectives. Don’t sell when the trend is bullish and don’t buy when the trend is downwards.

4. It is best to look at the time frame that is bigger than the one you have selected to trade in. This offers a larger market price movement picture which helps to define the trend clearly. To give an example, when trading with a time frame of 15 minute, look at the 1 hour charts. Similarly when trading with 1 hour you must get a daily and weekly picture of price movements. When it is tough to spot a trend in Forex, select a larger time frame. You will always find the up and down market patterns and ensure that you understand the
overriding trends, except you are a scalper. Scalpers don’t need to study big trends, but look at what is happening in the market in the present with a 1-5 minute time frame.

5. It is highly avoidable to risk over 2 or 3% of your total trading account. A key difference between a successful and unsuccessful trader is the ability to survive unfavourable market situations. An unsuccessful trader may lose his account with 0-15 unprofitable trades in a sequence. Even in an identical trading system two traders can get reverse results and the difference is in the way money is managed. A quick fact to remember is money management, losing half of your account balance entails generating 100% return just to
get back the original balance.

6. Play down the emotions and trade calmly. Avoid taking revenge if you lose a trade and don’t be insatiable by including additional positions when you are winning. Keep in mind that overreaction stops clear thinking and may result in loss of cash. By overtrading you wobble your money management which considerably enhances trading risks.

7. Select time frames best for you to ensure that you remain secure and have sufficient time to analyze the place market, close orders and more. There are individuals who are not able to wait for hours for things to move and prefer smaller time frames. While others
find 10-15 minutes a hustle to take correct decisions.

How to make money trading Currencies on Forex Market How to make money trading Currencies on Forex Market(0)

How to Profit From Trading on the Forex Currency Market 

Among the most noteworthy events in the Forex currency market history is the formation of the gold standard monetary system in 1875. Each country attached certain amount of its currency to an ounce of gold.  The changing gold price between two currencies was the foremost in history as the method of standardizing currency exchange.

With the World War I there was a breakdown of the gold standard as the key European powers did not have adequate gold to exchange for the amount of currency being printed by the governments during the period for completing big military projects. Countries used gold standard between the wars, but it was dropped by most countries when World War II started. On the other hand gold never lost its place as the crucial form of valuing money.

Bretton Woods System was executed in 1944 which resulted in the formation of fixed exchange rates and it led to replacing gold standard with the U.S. dollar as the chief reserve currency. This also suggested that the only currency to be backed by gold will be the U.S. dollar. U.S. declared in 1971 that it would not exchange gold for U.S. dollars anymore which were kept in foreign reserves which marked the end of the Bretton Woods System.

The breaking down of the Bretton Woods System ultimately in 1976 resulted in the worldwide acceptance of floating rates for foreign exchange. This can be said to be the “birth” of the present foreign currency exchange. It started trading electronically only from the mid 1990s.

How Business can use Forex Market

Forex trading entails a transaction in which one party or person buys certain amount of a currency by paying the amount in different currency. The Forex market is an international decentralized financial market for currency exchange. There are a number of financial hubs around the world for trading a wide range of different currencies. They work around the clock except for weekends. The foreign exchange market plays a key role in determining the value of the country’s currency in comparison to another.

The key reason the existence of Forex market is to assist investment and international trade by allowing businesses to convert currencies. To give an example, a business from the U.S. can buy Japanese goods and pay in their currency, Yen, even with the business operating in US dollars and being based in America. The Forex market is also a medium for speculation which adds liquidity to the market and makes rates of exchange less impulsive. Forex market facilitates “carry-trade” where investors can purchase high rated currencies against low rated ones and profit from the interest rate.

Advantages of Trading Currencies in the Forex Market

Some of the many benefits of trading the Forex market include:

  • You can trade from anywhere with just a computer and an internet connection.
  • Huge trading volume leads to intense liquidity which makes it simpler to enter and exit at the price you want.
  • It offers flexible trading hours with 24 hours of continuous operation 5 and half days in a week.
  • Greater control to improve profit margins comparative to the size of the account as compared to other markets.
  • Lesser variables to think about as compared to commodity trading or stock.
  • There is no intrinsic market prejudice such as bullish bias stocks, which offers better chance to earn from the instability in falling or rising market.
  • Easy to access and start-up costs are low.

Forex markets are considered to be the market nearest to being “perfect competition” market with the advantages listed above and some other reasons. As per the Bank for International Settlements, the daily turnover in international foreign exchange markets on an average was estimated to be $3.98 trillion in 2010 April  which was about 20% higher than the $3.21 trillion average  recorded in 2007 April.

Who Trades Forex?

  • Big banks, central banks and some financial institutions.
  • Government
  • Brokers/ currency speculators / retail traders
  • Institutional investors
  • Corporations working internationally
  • Tourists/ Travellers

Forex Currencies Most Highly Traded

Mentioned below are the popularly traded currencies by % of daily share in April 2010:

  • U S dollar = 41.9%
  • Japanese yen = 12.0%
  • Euro = 29.1%
  • New Zealand = 1.6%
  • Australian dollar = 7.6%
  • Pound Sterling = 12.9%
  • Swiss franc = 6.4%
  • Hong Kong dollar = 2.4%
  • Canadian dollar = 5.3%
  • Swedish Krona =2.2%

How are Forex Rates Determined?

Economic aspects: They typically include governments, banks or other agency’s economic policies and the monetary situation as assessed by economic reports and other fiscal indicators.

Political Situation: Events and political conditions in the national, international or and regional space may have a key effect on the Forex currency markets.

Market Psychology: The way participants in the market think has an influence on the foreign exchange market in many ways. Eventually all the monetary variables are articulated through trader psychology or the human brain.

Trading Algorithms: Algorithmic trading has become a key player on the rates of Forex with the growing popularity of electronic trading based on algorithms like robot trading or computers.

Contacts and information

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