FOREX 101

October 8, 2012 by  
Filed under Featured, Forex Articles


While there are many investment vehicles to put your money to work these days, none are as large, and potentially as lucrative as the foreign exchange markets. With a daily turnover of over $1.4 Trillion! (yes you read that right…daily). Needless to say it offers a freedom that many other markets just cannot compete with.

Along with the fact that it is a huge market, it also comes with a stack of other benefits…

Anytime…anywhere
Open 24 hours on weekdays, the fx market gives you the ability to trade any time of the day or night. Compare that to other markets that operate at specific hours of the day, the forex market is a buzz of activity and opportunities throughout the week. Investors can react to specific news events and trends that happen within the week, anytime.

Freedom
This also gives traders another type of freedom. The freedom to choose where you work, and when. This has allowed many new traders enter the market that may work during the day. If you have a laptop, then you can trade no matter where you are!
Less Cost
Due to the size, and daily turnover of the fx market, and the fact that it is traded electronically, the costs of trading are far less significant than trading normal equities (shares/stocks). The majority of fx trading cost is built into the opening spread (the difference between the buy and sell price when you enter the trade). The spreads here are usually smaller than the spreads in other markets, which again makes the ability to earn a profit much easier.

Leverage
Unlike other markets where leverages are small, forex trading allows for bigger leverages, giving you the chances to trade (at times) up to four hundred times your investment. Of course, like any investment of this nature, leverage also carries a significant degree of risk. Thankfully with the forex market in particular you can easily manage your risk. At times risking only a handful of dollars per trade in order to place your trade.

Stable Price
Since your trade is executed immediately, your trades are done with precision, and you have less risk that the prices will slip if you set up orders to enter at specific prices. Due to the rapid nature of the markets, you can be in and out of a trade and not have your funds tied up in the markets.

Transparency
With the speed, liquidity, and popularity of the fx markets this also means that the market moves in predictable patterns. This means you can formulate a trading plan based on these repeatable patterns, and ensure you can predict the market with a certain level confidence and consistency.

Stable Profit Chances
Since your trading involves two currencies and not other markets and trends, one always has the opportunity for profit. There is no bulldog watching of rising or falling of markets, goods and industries. Whether the market is bullish or bearish does not really need to worry you. What really matters is that you pick the right currency to trade.

Forex trading is considered the perfect competition for logical reasons. Everybody is presented with an equal playing field. Even if the currency is falling, it just means that there is currency rising somewhere and the opportunity of profit exists. An unlimited earning potential, the freedom, and the even opportunity makes the foreign exchange market an exciting opportunity for anyone.