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Boost FOREX Trading Profits Using These 3 Simple Guidelines By Roxanne Manning FOREX trading is nothing more than direct access trading of different types of foreign currencies. In the past, foreign exchange trading was mostly limited to large banks and institutional traders. Read more...
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FOREX versus Futures By Phil Skills FOREX Trading vs Futures TradingThe origins of today's futures market lies in the agribusiness markets of the 19th century. At that period, farmers began selling contracts Read more...
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Forex Trading By Charles Fuchs Forex trading has been growing rapidly among day traders since the 1990s, as day traders have seen the advantages that trading currencies can have over trading stocks. However, since there are fewer Read more...
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FOREX versus Stocks By David Greene
Stocks have been a popular investment for hundreds of years. Companies issue stocks to raise capital for expansion and new projects, and each share of the stock represents a partial ownership in the company.
When the company does well and makes a profit, the value of the stocks should rise. Stock owners can sell their shares for a profit or hold on to the stock for what they hope will be even more gain in the future. Sometimes companies will declare and pay dividends. Dividends are part of the profits that are distributed to share holders.
Stocks are traded on stock exchanges. Most stocks are bought and sold through brokers who charge a commission or fee for this service. American stock exchanges include the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). Most stocks are only listed on one exchange, although large companies may have listings on several exchanges including exchanges located in different countries.
Stocks were traditionally seen as long term investments.
So called 'blue chip' stocks - those having proven value over many years - may form the backbone of an investment portfolio. Short term trading is a relatively new phenomenon made possible with the advent of Internet trading. Day traders attempt to take advantage of large daily fluctuations in the market by buying and selling many times in one trading period. It is requires good trading skills, is relatively risky, and any profits realized are reduced by broker commissions charged on each transaction.
Stocks may sometimes be bought on margin, meaning that the investor borrows money to buy the stocks. Margin rates are usually around 50% - the investor can borrow as much as half the value of the stock.
FOREX
The Foreign Exchange Market (FOREX) is quite different from the stock exchange. In contrast to the stock exchange, the FOREX is primarily a short term market. Most traders enter and exit
US Open Tennis Tickets - Sponsored Link Ad - TicketsFor.com Jul 31 2010 6:02PM GMT BSP foreign exchange swaps climb to $16 billion in first half Manila Bulletin Jul 31 2010 6:02PM GMT Dollar caps best monthly gains in a year WA Today.com.au Jul 31 2010 5:37PM GMT Ringgit likely to test 3.20 level against the dollar in H2 2010 Sabah Daily Express Jul 31 2010 5:37PM GMT Forex - Former World Bank auditor to lead U.N. internal watchdog unit Forex TV Jul 31 2010 5:28PM GMT Forex Leverage Cap To Be Introduced Aug 1 Nikkei Net Interactive Jul 31 2010 5:24PM GMT Dim U.S. Outlook May Send Yen Higher Nikkei Net Interactive Jul 31 2010 5:24PM GMT Dollar eases ahead of key US report New Age Bangladesh Jul 31 2010 5:13PM GMT Trillion Dollar Babies: Re-examining the Pentagon's Spending Habits CounterPunch Jul 31 2010 5:08PM GMT Forex - They Just Don't Get Merck or GDP! Forex TV Jul 31 2010 4:38PM GMT Forex - Does Bernanke have a credibility problem? Forex TV Jul 31 2010 4:38PM GMT Currency News - Why Most Traders Can't Make Profits with It ForexPros.com Jul 31 2010 3:28PM GMT Dollar overcomes GDP worry and rises, bonds up MSN Money Canada Jul 31 2010 3:07PM GMT Belarus delivers with debut dollar bond Euro Week Jul 31 2010 2:59PM GMT The Yin and Yen of Toray MoneyShow.com Jul 31 2010 2:53PM GMT #Euro rises as Sovereign-Debt Concern Eases $EURUSD Benzinga.com Jul 31 2010 2:40PM GMT Exchanges has been allowed to introduce currency options by Sebi Top News Singapore Jul 31 2010 2:40PM GMT Forex - ECB?s Wellink Says Basel Rules are ?Substantial,? NRC Reports Forex TV Jul 31 2010 2:39PM GMT
deals within a 24 hour period. Sometimes a trade is made within a few minutes. Many FOREX trades can be made in one day without building up a large brokerage fee because FOREX trades are commission free. Brokers earn money by setting a spread ? the difference between asking and selling prices.
The FOREX is the largest financial market in the world. It is handles transactions worth $1.5 trillion every day. By comparison, all the American stock exchanges combined handle daily transactions worth about $100 billion. The huge volume of FOREX means that it is the most liquid market in the world.
There is always a buyer and seller for any type of currency because the world economy relies on the movement of goods from country to country. The stock market is less liquid because participants may choose to hold their investments or move on to other markets.
The FOREX is not located in any one location. Trading markets are located world-wide and because of difference in time-zones trades can be made 24 hours a day, 5 days a week.
Trading begins in Sydney, Australia on Monday morning (Sunday afternoon New York time) and continues non-stop until Friday afternoon New York time. Stock exchanges have more limited trading hours.
While it is possible to trade on exchanges world-wide, each exchange is independent and operates for just 7 hours a day. There is no way to buy or sell a certain stock that is only traded on one stock exchange when that exchange is closed.
There are other advantages to trading of FOREX. It is more predictable than stocks. It follows well established trends; it allows high leverage, typically 100:1 instead of 2:1 on the stock market; and it doesn't require a large investment . Mini accounts as small as $250 can get you started in FOREX.
One other advantage is that with it is easy to set up a practice account an use the same trading software that you will use once you start to trade real money. This is a great way to get started.
David is a retired forex trader and dealer now living in The Land of Smiles, Thailand, decompressing from over 20 years of trading activity.
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