Forex is an open market for trading foreign exchange where money itself is bought and sold. The major advantage of a forex market over stock market is that instead of traders investing and waiting for a number of years for there stock values to increase, here they just see there currency values increasing and decreasing over time. This allows them to make several trades within a day. The forex stock trading is similar to what is known as as the future’s market. The advantage here is that the liquidity that is offered here is higher and the potential factor is lower, owing to the lesser investments. The forex stock trading is similar to what is known as as the future’s market. The advantage here is that the liquidity that is offered here is higher and the potential factor is lower, owing to the lesser investments.
On a large scale the Forex stock trades are executed between two individuals or firms, eliminating the necessity for a factor. The assistance of a good Forex and stock brokers are very essential so as to achieve success with the money that the traders may invest. The forex stock trading market is more of an objective market. In the forex stock market if the participants want to modify or manipulate the values of the currencies for certain purposes, they can do so by operating with billions of dollars or any other currency. Since it operates on such high values the manipulation of one participant in the market isn’t a possibility. But the liquidity of this market allows both sides of traders to open and close the situations.
The foreign exchange currency market, likewise referred to as Forex, is the most liquid market in the world. Each day, the trading volume on Forex exceeds $1, 300, 000, 000, 000 U.S. dollars are. Forex is the world’s biggest market, partly owing to the practice of day trading. Day trading differs from other forms of trading in the length between buying and selling the stocks, or in this case currency. A day trader sells everything by the end of the day’s market. No currency is held over to be traded the next day. Whatever the trader buys must be sold prior to the end of the day or vice versa.
In actuality, the market doesn’t have an expiry of the day. It is open 24 hours, there from Sunday afternoon to Friday afternoon. So the beginning and termination of the trading day is set by the trader, and not the market itself.
The time that a dealer will occupy a position is highly arbitrary and is dependent upon the strategies that he follows through out the trading. It is also important to take into account the fluctuations in the currency and stock values. Another important type of trading which we’ll come across when we’re trading in forex stock trading is Margin Trading. Margin Trading is where traders trade with borrowed amounts. It allows traders to start trading with lesser capitals than what is usually allowed. It reduces the overhead expenses of having to transfer money and allows the traders to open there positions with lesser amounts of U.S dollars thus buying and selling other currencies. In forex and stock trades it isn’t necessary to actually buy some currencies to sell it later. It is adequate for the traders to actually open the positions for buying and selling without having any.
FAQ’s: Stock vs Forex for trading? Pros/Cons?Can you get rich with forex trading like you can with trading shares? What is better? I am thinking that forex is better because the market is opened pretty much anytime thus I would be able to keep a day job and trade too. Forex trading does not seem like there is much to it, as in… the news does not effect it does it? Like for companies once a company releases something publicly then the market gets effected. Is forex like that too? I am completely new to Forex and just found out about it yesterday… Is forex trading just based off of pattern analysis?
First things first, you are new to Forex trading and at first you say it appears to you that there is not much to it. This opinion is normal for people new to Forex but when you get experience you will soon realize just how much you don't know and it is lifetime learning material. Trading Forex is also very hard and high risk so don't be under any disillusion; however the potential to make more money fast exists as does the potential to lose. Stocks are much lower risk in contrast and of course will be less profitable but returns are safer, more secure and consistent… but this is relative. Contrary to your initial thoughts the news does affect the Forex market a lot and that is why there is an economic calendar of scheduled news on all major Forex news sites. Forex is trading with leverage and because of that profits and losses are magnified sometimes by 400x or more, which means you can lose your initial deposit or make a lot of money within the day, if you are careless. To trade Forex successfully you need to learn how to interpret the economic news, understand technical analysis and develop your own psychology to handle the market with real money. It is possible to become consistently profitable but you need a lot of experience and the right attitude. Since it is a zero sum game those making money in Forex have to be much better than the average trader, and they have to have the right tools to beat the average trader (which includes having more funds). It also helps to be with a good STP/ECN broker that does not interfere with trades. Here are some good websites that can help: http://www.forexfactory.com/ – Biggest Forex website, forum, news, economic calendar http://www.babypips.com/ – Forex educational website http://www.investopedia.com/ – Finance educational website http://www.investing.com/ – Forex, CFDs, Binary Options, Stocks news and information portal http://www.xglobalmarkets.com/ – ECN-STP broker
Small investors have a fair chance in stocks, and the market grows over time. Forex is a zero-sum game, minus commissions. There is a loser for every winner. Big players with experience and resources win, while novices lose quickly. Retail forex has more scams than any part of investing. Read the CFTC warning below.