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Currency Trading, the biggest
and most exciting market on earth
Foreign Exchange
is
the world's largest financial market, and has been available to retail
traders since 1999. This new and exciting global market offers
opportunities unavailable in other categories.
Countless Opportunities!
In Forex trading, when you invest with a 1:100 “leverage”, changes of,
say, 1.3% turn to 130%, during a single day, even hours or minutes! You
may profit unlimited amounts, but if the exchange rate moves against
your favor, you lose not more than your initial investment.
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Why Trade the Foreign Exchange...
24-hour market
Trade on your own schedule, 24 hours
a day, during normal market hours whenever the markets
are open (Sunday 16:00 to Friday 16:30 Eastern Time)
Forex is a true 24 hour market, 5.5 days a
week, which offers a major advantage over
equities trading. Investors are able to trade at
odd hours, thus allowing more flexibility for
personal, business and social activities.
Whether trading at 8am, 2pm, or even 2am, there
will always be buyers and sellers actively
trading foreign currencies. Such flexibility
allows traders to immediately respond to
breaking news and other political factors
driving the market.
After hours trading in the equities market
has several limitations. In the US, for example,
equities traders have access to ECNs (Electronic
Communications Networks), also known as
“matching systems”. These networks are
established to provide a method for equities
traders to buy and sell amongst each other. Such
networks are usually not able to offer as tight
of spreads as would be offered during normal
market hours, thus most trades are not executed
at a fair market price, subsequently there is no
guarantee that every trade will be executed.
Low transaction costs
No commissions with some brokers, as
compensation is through a portion of the bid / ask
spread.
High leverage
Leverage is the key to understanding the risk
associated with trading the Forex Market, and of
course, the potential for gain. Many Forex
brokers offer leverage as high as 200 – 1,
meaning that $50 of margin would control a
$10,000 position in the market (this is an
example of a mini lot). (
view figure 3 ) Forex trading is often
attractive to investors coming from the equities
market because Forex trading offers such high
leverage. It is important to understand why
Forex brokers offer higher leverage, and of
course… the dangers associated with such.
To some extent, higher leverage is a
necessary evil in the Forex market. It can offer
advantages over equities trading, but only if it
is properly understood and utilized. Though
currency values on a global stage are constantly
in a state of flux, high liquidity and market
stability translate to relatively small daily
price movements. In fact, average daily movement
is around 1% on most major pairs. Compare that
to the equities market, where average daily
movements are closer to 10% and it is not hard
to understand why large contracts are needed in
order to yield profits on intraday price
movements.
Without high leverage most retail investors
would not be able to afford trading in the Forex
market. However, with increased buying power
comes increased risk. Traders who are new to the
market often make the mistake of over-trading
their account. Because relatively small margin
is required to open large positions beginning
traders often make the mistake of opening too
many positions at one time. A quick market move
can then result in substantial losses. IBFX
would advise any trader new to the Forex market
to trade only a very small percentage of their
account at any one time.
Up to 400:1 - much higher than
equities and futures trading allows††
Market volume helps facilitate
price stability
With an average turnover of $3.2
trillion per day, Forex is the most traded market in the
world
(Source: Bank for International
Settlements, September 2007)
Technologically enhanced platform of
numerous brokers contains many features and professional
tools designed to heighten your overall trading
experience.
Currency trading is arguably the most
lucrative business a person can enter
into. With thorough understanding , and
strict money management, it is possible
to make money beyond your wildest
dreams. The types of returns in Forex
are unlike anything else. However the
risks can be large which is why it's
imperative that a person gains a solid
understanding of how to trade. Without
decent knowledge, it's not too
dissimilar to gambling. Although some
people don't like the way that sounds,
if you don't follow a good trading plan
and have an understanding of the market,
it might as well be.
Profit Potential in Both Rising and Falling
Markets
Like any market, there is always a buyer and
a seller the world of currencies. The potential
for profit will of course rally between the
buyers and sellers, the longs and the shorts.
Trading currencies in pairs offers the advantage
of speculation from either side, but it is the
volatility in combination with excellent
liquidity that offers currency investors a true
advantage over any other market. Regardless of
the time of day, traders in the Forex market can
long or short any currency pair of their choice.
Many brokers also offer hedging, meaning that
traders can take a long and short position on
the same currency pair. The market’s volatility
provides the constant potential for gain, and of
course, the constant potential for loss as well.
Forex trading can be risky, but execution in or
out of trades should not be a problem when
trading through a reputable broker. Equities
traders, on the other hand, may have a much more
difficult time liquidating stocks when the
market is moving against them.
Higher Risk
The off-exchange retail foreign currency
market (or Forex market) has many differences,
as outlined above. However, one of the most
significant factors is the element of risk. The
Forex market is the riskiest of all investment
vehicles and is suitable only for experienced
traders. The higher leverage and volatility
found in this market increase the traders risk
of loss. There is the potential to lose, all or
more, of your original investment.
Thank you,
FxTeam
You may go to 'become a member' page to sign up
at anytime.
RETURN TO TOP
††
You must consider the risks associated
with increasing your leverage. A
relatively small market movement will
have a proportionately larger impact on
the funds you have deposited or will
have to deposit; this may work against
you as well as for you. You may sustain
a total loss of initial margin and you
may be required to deposit additional
funds to cover a short margin position.
More about leverage elsewhere.
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