Forexpotentials.com - Articles - What is FOREX ?
Crucial factors of Forex trading
The main purpose for writing this article is to show you the benefits of trading on the Forex market. First of all, let's understand what Forex is.
Forex is a worldwide financial market created for the trading of different currencies. We should admit that this market is decentralized all over the world.
Financial main centers are located in many countries and function as anchors of trading between a lot of different buyers and sellers day and night. Forex determines the relative values of currencies from all over the world. The first thing we're going to talk about it liquidity. The forex market seems to be the most liquid financial structure. Huge sums of money are traded daily at Forex. According to statistics about 2 trillion dollars are traded everyday. The commodities market can trade about 450 billion dollars daily; meanwhile the USA stock market trades around 250 billion dollars every 24 hours. These circumstances ensure better trade execution and prevent Forex from manipulation.
Trading Times. This element is crucial when it comes to Forex trading and you should know about it. So the Forex market works 24 hours daily except weekends. It means that in the US Forex opens at 3: p.m. Sunday and closes at 5:00 on Friday. It allows active traders to choose the time period they want to work. You should also remember that commodities trading hours depend on which commodity you're trading. USA stocks can be traded from 8:30 am to 6:30 pm on every weekdays.
Leverage. This is another vital factor which makes your trading profitable or disadvantageous. Your leverage may be 100:1 depending on your Forex account size. There are some Forex brokers that can offer you leverage of up to 400:1 but we don't recommend that kind of leverage. To add, leverage in the stock market may be as high as 4:1. As far as the commodities market leverage, it can vary and can be pretty high. We want to point out that the commodity market is not as liquid as the Forex, its leverage is really riskier. As you see you have to make decision on your own.
Trading costs. This is a quite simple factor to understand. Transaction costs in the Forex is the difference between the buy and sell cost of each currency pair. No brokerage fees. Stock and commodity markets include transaction costs and brokerage fees. If you use discount brokers, those fees accumulate.
A lot of newcomers are concerned about minimum investment. There are three types of accounts including micro ($5), standard ($25) and unlimited ($1000) Actually, it's not a problem to start trading at Forex right now.
Currencies. According to statistics 90 % of all trading transactions are made on 7 main currencies. By the way, the USA stock market provides 40, 000 stocks. Forex includes about 200 commodity markets.
Trade execution is almost instantaneous in the Forex market. So you don't have to bother and wait for a long time. Both the equity and commodity markets make you count on a broker to execute your trades. Unfortunately, their results are frequently inconsistent. Of course, you can try to control your broker. The best way is to choose a reputable and reliable broker.
With all the mentioned trading the Forex market seems to be very attractive. You should remember that it still requires a lot of education, trading skills, discipline and commitment. Don't forget about those major features of character as patience and passion. All trading can be risky. Despite this one wise proverb says, 'No risk no fun'.
What is FOREX ?
Crucial factors of Forex trading
The main purpose for writing this article is to show you the benefits of trading on the Forex market. First of all, let's understand what Forex is.
Forex is a worldwide financial market created for the trading of different currencies. We should admit that this market is decentralized all over the world.
Financial main centers are located in many countries and function as anchors of trading between a lot of different buyers and sellers day and night. Forex determines the relative values of currencies from all over the world. The first thing we're going to talk about it liquidity. The forex market seems to be the most liquid financial structure. Huge sums of money are traded daily at Forex. According to statistics about 2 trillion dollars are traded everyday. The commodities market can trade about 450 billion dollars daily; meanwhile the USA stock market trades around 250 billion dollars every 24 hours. These circumstances ensure better trade execution and prevent Forex from manipulation.
Trading Times. This element is crucial when it comes to Forex trading and you should know about it. So the Forex market works 24 hours daily except weekends. It means that in the US Forex opens at 3: p.m. Sunday and closes at 5:00 on Friday. It allows active traders to choose the time period they want to work. You should also remember that commodities trading hours depend on which commodity you're trading. USA stocks can be traded from 8:30 am to 6:30 pm on every weekdays.
Leverage. This is another vital factor which makes your trading profitable or disadvantageous. Your leverage may be 100:1 depending on your Forex account size. There are some Forex brokers that can offer you leverage of up to 400:1 but we don't recommend that kind of leverage. To add, leverage in the stock market may be as high as 4:1. As far as the commodities market leverage, it can vary and can be pretty high. We want to point out that the commodity market is not as liquid as the Forex, its leverage is really riskier. As you see you have to make decision on your own.
Trading costs. This is a quite simple factor to understand. Transaction costs in the Forex is the difference between the buy and sell cost of each currency pair. No brokerage fees. Stock and commodity markets include transaction costs and brokerage fees. If you use discount brokers, those fees accumulate.
A lot of newcomers are concerned about minimum investment. There are three types of accounts including micro ($5), standard ($25) and unlimited ($1000) Actually, it's not a problem to start trading at Forex right now.
Currencies. According to statistics 90 % of all trading transactions are made on 7 main currencies. By the way, the USA stock market provides 40, 000 stocks. Forex includes about 200 commodity markets.
Trade execution is almost instantaneous in the Forex market. So you don't have to bother and wait for a long time. Both the equity and commodity markets make you count on a broker to execute your trades. Unfortunately, their results are frequently inconsistent. Of course, you can try to control your broker. The best way is to choose a reputable and reliable broker.
With all the mentioned trading the Forex market seems to be very attractive. You should remember that it still requires a lot of education, trading skills, discipline and commitment. Don't forget about those major features of character as patience and passion. All trading can be risky. Despite this one wise proverb says, 'No risk no fun'.