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The Benefits of FX Trading
by David Molina
http://www.fxtradingmentor.com
Many people are looking at getting into day trading, and
start with studying the Stock Market, and the different
stock exchanges. What many don't realize is that there are
different markets and financial instruments that one can
profit from. One market that has recently become available
to the public to trade is the Foreign Currency Exchange, the
FOREX.
The foreign exchange market is the largest financial market
in the world. It trades upwards of 2.5 trillion dollars per
day, which is approximately 1000 times the volume of the New
York Stock Exchange. Quite easily, the foreign exchange
market dwarfs the stock market of any country.
So, where is the foreign currency market? Well, unlike the
stock exchanges of the world. The foreign currency market
is a virtual market that is connected by the internet,
phones, and fax.
The advantage of having a worldwide currency market is that
it is open 24 hours a day, 5 days a week. Living in the
USA, one could trade 24 hours per day Sunday 5pm to Friday
4pm EST. One can only trade stocks during normal market
hours, so for those that have jobs during the day, the FOREX
market is much more accessible as trading can be done at
night or early in the morning before going to work.
Other benefits of the foreign currency exchange include:
1.~High Leverage: Currency brokers usually give their
traders 100:1 leverage, meaning that if there is $1000.00 in
ones account, they will let one control $100,000.00, which
allows currency traders to reap large gains from relatively
small price movements in the market.
2.~High Liquidity: Because the currency market is the
largest market in the world with huge daily volumes, one is
always able to get in and out of trades as liquidity is
never an issue.
3.~Stops are always honored: Except in extremely volatile
markets, which is rare, limits and stops are always honored.
Because of the market's liquidity and 24 hour continuous
trading periods, dangerous trading gaps are eliminated
altogether. Orders are executed very quickly, without
slippage. In the stock market, it is much more frequent
that stops get skipped over as stock prices plummet, but in
the FOREX, one can be much more confident that the stops are
honored.
4.~Entry orders are instant: There is no lag time in placing
an order. Orders are processed instantly at the current
market price, or the price at which you set the order to
enter the market in the future.
5.~No Commissions: There are no commissions in currency
trading, the broker just takes a small difference between
the bid price and the ask price as its fee for the transaction.
As currency markets are some of the most volatile markets,
many fundamental variables such as weather, and war affect
the price of the currency, however, since there is no one
apparent reason much of the time for price movement, the
fundamentals get discounted and one can use an almost purely
technical approach to trading. This is why the FOREX is
considered one of the most predictable trending markets that
follows technical analysis methods more than any other market.
As one can see, there are many great benefits to using the
FOREX as a highly profitable financial instrument. One can
trade from home in their spare time, but first it is
important to get a solid education in learning specific FX
trading methods. Before trading in a live account, it is
important to first get educated using books, or online
courses. There are many courses online selling for upwards
of $3000.00, but it is not necessary to spend that kind of
money to get a good education. Usually the expensive
courses come with DVD's and other expensive items that raise
the price. Much of the time one can find a course for under
$500 that teaches the exact same content for much less money.
Wishing You Success in Trading!
David Molina
If you are interested in furthering your FOREX education and
want to get a free e-book "Forex Freedom", please visit:
http://www.fxtradingmentor.com
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