“How To” Start Trading The Forex Market? part 3
10 REASONS TO START
TRADING FOREX!
More and more well informed investor and
entrepreneurs are diversifying their traditional investments like stocks, bonds
& commodities with foreign currency because of the following reasons:
1) FOREX is the largest financial market in the
world.
With a daily trading volume of over $1.5
trillion, the spot FOREX market can absorb trading sizes that dwarf the
capacity of any other market. In fact, when compared with the $50 billion daily
market for equities or the $30 billion futures market, it becomes quickly
apparent this gives you, and millions of other FOREX traders, almost infinite
trading liquidity and flexibility.
2 ) FOREX is a True 24-hour market.
The FOREX Market never sleeps. Trading positions can be entered and exited
at any moment around the globe, around the clock, 5.5 days a week. There is no
waiting for an opening bell as in the case of trading stocks. It is a 24- hour,
continuous electronic (ONLINE) currency exchange that never closes. This is
very desirable for you if you want to trade on a part-time basis, because you
can choose when you want to trade: morning, noon or night.
3)There is never a Bear Market in FOREX.
You can have access to a seamless exchange of
currencies. Currencies trade in "pairs" (for example, US dollar vs.
JPY (YEN) or US dollar vs. CHF (Swiss franc), one side of every currency pair
(for example, USD/CHF) is constantly moving in relation to the other. Thus, when
you buy a particular currency, you are actually simultaneously selling the
other currency in that particular pair. As the market moves, one of the
currencies will increase in value versus the other. Of course, it is up to you
to choose the correct currency to be long ( you bought) or short( you sold).
4 ) High Leverage - up to 400:1 Leverage.
You are permitted to trade foreign currencies
on a highly leveraged basis - up to 400 times your investment with Fenix
Capital Management, LLC and with some other brokers.
Standard 100,000- US$ currency lots can be
traded with as little as 0.25% margin, or $250.
Mini FX accounts are permitted to trade with
just 0.25% margin, meaning, just $25 allows you to control a 10,000-unit
currency position.
Futures traders, who are accustomed to margin
requirements generally equal to 5-7%-8% of the contract value, will immediately
recognize that the FOREX market provides much greater leverage, and for stock
traders, who must post at least 50% margin, there’s no comparison. If you’re
looking for an efficient use of trading , trade the Forex Market.
5 )Price Movements might be Highly Predictable.
Currency prices in the FX market generally
repeat themselves in relatively predictable cycles, creating trends. The strong
trends that foreign currencies develop are a significant advantage for traders
who use the "technical" methods and strategies.
Unlike stocks, currencies have the tendency to
develop strong trends. Over 80% of volume is speculative in nature and, as a
result, the market frequently overshoots and then corrects itself. As a
technically-trained trader, you can easily identify new trends and breakouts,
to enter and exit positions.
6 ) YOU don't pay commissions or fees to trade
FOREX
When you trade FOREX, through Fenix Capital
Management LLC (FCM) you can do it totally FREE of commissions and fees ,
regardless of your account size.
Fenix Capital Management LLC, requires a very
low minimum amount to open a brokerage account, only US$ 200 and they do not
charge commissions or fees to trade or to maintain an account, regardless of
your account balance or trading volume.
7 ) YOU don't have to pay trading fees or exchange
fees.
There are none of the usual fees, which futures
and equity traders are accustomed to pay:
NO exchange or clearing fees,
NO NFA or SEC fees.
Because currencies trade over-the-counter
(OTC), via a global electronic network, in FOREX, what you see on your trading
screen, is what you get, allowing you to make quick decisions on your trades
without having to worry or account for fees that may affect your profit/loss or
slippage.
In the equity and commodity markets, you must
pay both a commission and exchange fees. The over-the-counter structure of the
FX market eliminates exchange and clearing fees, which in turn lowers
transaction costs.
8 ) HOW to Forex brokers make money if they don't
charge commissions?
Like all traded financial products,
over-the-counter currency trading involves a bid/ask spread, which represents
the prices at which your counterpart is willing to trade. Your broker will
receive a part of this bid/ask spread.
Because the currency market offers
round-the-clock liquidity, you receive tight, competitive spreads both
intra-day and night. Stock traders can be more vulnerable to liquidity risk and
typically receive wider trading spreads, especially during after-hours trading.
9) Market Transparency.
Market transparency is highly desired in any
trading environment. The greater the market transparency, the more efficient
the market becomes. Unlike other markets where transparency is compromised
(like in the many recent scandals), FOREX markets are highly transparent (i.e.,
analyzing countries, and having access to real-time research / news, is easier
than analyzing companies).
Because of this transparency, as an FX trader,
you will be able to apply risk management strategies in accordance to your
fundamental and technical indicators.
10 ) Instantaneous Order Execution
The FX market offers the highest level of
market transparency out of all the financial markets. Because of this, order
execution and fill confirmation usually occur in just 1-2 seconds.
In Forex, order execution is all-electronic and
because you'll be trading via an Internet-based platform, instantaneous
execution is routine.
There are no exchanges, no traditional
open-outcry pits, no floor brokers, and consequently, no delays.( will be
continued(
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