Detailed Forex Trading Tips - Trade Forex Section

Welcome to Detailed Forex Trading Tips

Article

The 6 Advantages Forex Trading Has Over Other Investments
David Morrison

There are many different advantages to trading forex instead of futures or stocks, such as:

1. Lower Margin

Just like futures and stock speculation, a forex trader has the ability to control a large amount of the currency basically by putting up a small amount of margin. However, the margin requirements that are needed for trading futures are usually around 5% of the full value of the holding, or 50% of the total value of the stocks, the margin requirements for forex is about 1%. For example, margin required to trade foreign exchange is $1000 for every $100,000. What this means is that trading forex, a currency trader's money can play with 5-times as much value of product as a futures trader's, or 50 times more than a stock trader's. When you are trading on margin, this can be a very profitable way to create an investment strategy, but it's important that you take the time to understand the risks that are involved as well. You should make sure that you fully understand how your margin account is going to work. You will want to be sure that you read the margin agreement between you and your clearing firm. You will also want to talk to your account representative if you have any questions.

The positions that you have in your account could be partially or completely liquidated on the chance that the available margin in your account falls below a predetermined amount. You may not actually get a margin call before your positions are liquidated. Because of this, you should monitor your margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.

2. No Commission and No Exchange Fees

When you trade in futures, you have to pay exchange and brokerage fees. Trading forex has the advantage of being commission free. This is far better for you. Currency trading is a worldwide inter-bank market that lets buyers to be matched with sellers in an instant.

Even though you do not have to pay a commission charge to a broker to match the buyer up with the seller, the spread is usually larger than it is when you are trading futures. For example, if you were trading a Japanese Yen/US Dollar pair, forex trade would have about a 3 point spread (worth $30). Trading a JY futures trade would most likely have a spread of 1 point (worth $10) but you would also be charged the broker's commission on top of that. This price could be as low as $10 in-and-out for self-directed online trading, or as high as $50 for full-service trading. It is however, all inclusive pricing though. You are going to have to compare both online forex and your specific futures commission charge to see which commission is the greater one.

3. Limited Risk and Guaranteed Stops

When you are trading futures, your risk can be unlimited. For example, if you thought that the prices for Live Cattle were going to continue their upward trend in December 2003, just before the discovery of Mad Cow Disease found in US cattle. The price for it after that fell dramatically, which moved the limit down several days in a row. You would not have been able to leave your position and this could have wiped out the entire equity in your account as a result. As the price just kept on falling, you would have been obligated to find even more money to make up the deficit in your account.

4. Rollover of Positions

When futures contracts expire, you have to plan ahead if you are going to rollover your trades. Forex positions expire every two days and you need to rollover each trade just so that you can stay in your position.

5. 24-Hour Marketplace

With futures, you are generally limited to trading only during the few hours that each market is open in any one day. If a major news story breaks out when the markets are closed, you will not have a way of getting out of it until the market reopens, which could be many hours away. Forex, on the other hand, is a 24/5 market. The day begins in New York, and follows the sun around the globe through Europe, Asia, Australia and back to the US again. You can trade any time you like Monday-Friday.

6. Free market place

Foreign exchange is perhaps the largest market in the world with an average daily volume of US$1.4 trillion. That is 46 times as large as all the futures markets put together! With the huge number of people trading forex around the globe, it is very hard for even governments to control the price of their own currency.

About The Author

David Morrison gives you a handy, easy to understand intro to the wonderful, profitable world of forex trading. This article is free to publish - more information can be found at http://www.ForexTrader123.com.

Trade Forex News

trade forex

VIENNA, Austria (AP) — The Russia-Ukraine natural gas dispute hit Europe with the force of a winter storm Tuesday, cutting or limiting supplies to at least a dozen nations. Tens of thousands of people were left without heat and governments ...

Energy fight between Ukraine and Russia creates natural gas shortages ... - Chicago Tribune

Jan 07 - Short-Term Forex Technical Outlook: USD/JPY (Update) Jan 06 - A Clear Channel And Immunity To Risk Trends Stabilizes AUDCAD Range Jan 06 - Euro Expected to Form a Low Soon; British Pound Breakout Trade Jan 06 - Short-Term Forex Technical ...

Short-Term Forex Technical Outlook: USD/JPY (Update) - DailyFx

I wrote yesterday that “the decline from the July 2008 high (1.6040) can be counted as a 5 wave drop (wave 5 is truncated). 5 waves down at this degree of trend indicate that the long term trend has changed and that a multi-year bear is underway ...

Euro Expected to Form a Low Soon; British Pound Breakout Trade - DailyFx

(*) This is the password you need to enter the hotComm room, not your FXstreet.com user account password. This is a unique opportunity for users of FXstreet.com to trade live, side by side with Derek Frey, head trader for Odom & Frey Futures Options ...

Live Look at Today's Markets - FXStreet.com

NEW YORK, (Reuters) - The U.S. dollar was firmer at the start of 2009 Friday as investors sold the euro after data showed deepening recession in the euro zone. Demand for the single currency also fell as traders deemed the euro's rapid advance versus ...

FOREX--Dollar rises broadly in thin trade, sterling falls - Forbes

Unique experiences and past performances do not guarantee future results! Testimonials herein are unsolicited and are non-representative of all clients; certain accounts may have worse performance than that indicated. Trading stocks, options and spot ...

Matsys D Trade Signals - FXStreet.com

MUMBAI: Firm equity markets amid sustained capital inflows helped the Indian rupee to recover sharply by 32 paise to 48.37/38 against the American currency in late morning deals. In quite trade at the Interbank Foreign Exchange (Forex) market, the ...

Rupee recovers sharply by 32 paise Vs dlr in early trade - Economic Times

Last week as we wrapped up our analysis for the year, we noted that with the euro buying $1.40 at the time, its reversal from $1.4719 signaled a drop to $1.35 “for the first week of January.” The ensuing slide to as low as $1.3317 ushered in by a ...

Forex: Why the Dollar Is Staying Strong - Seekingalpha.com

LONDON, Jan 2 (Reuters) - The dollar started 2009 on a firm tone on Friday as a recent euro rally was seen as overdone, but trade was choppy in holiday thinned conditions. The single currency was also hurt after data showed euro zone manufacturing ...

Dollar broadly higher in thin trade; sterling sinks - Forbes

An increasing number of people are now turning to forex trading as a means of generating revenue. However there is a lot to learn, so with that in mind, here are some of the basics you should know before you even think about trading forex with real ...