The Many Benefits of Forex Trading over the Stocks Trading
Online forex trading through Internet-based companies and forex brokers has dramatically lowered the costs of investing in forex trading, and empowered the individual retail investor to invest in the Foreign exchange market - and this online access to the forex market has made it accessible to the small and medium sized investors and retail traders.
This is why forex trading is gaining a lot of popularity, especially considering the Leverage given to retail investors and retail traders to start Forex Trading. Simply put leverage means For Every 1 dollar you put in your account - your broker will give you up to 100 dollars, so if you start forex trading with $1,000 dollars you will get a total of $100,000. Your profit will be calculated from this $100,000 dollars and you can double or triple your money in a matter of days - or also lose it in days.
This leverage is what makes Forex Trading profitable and attractive to many forex beginners. Leverage makes forex trading more accessible to the retail investors and retail traders who don’t have thousands of dollars to start trading with, but when they get forex leverage their capital is boosted to the tune of hundreds of dollars for every one dollar that is deposited.
If you have 1,000 dollars in your account and get the forex leverage of 100:1 you will have a total of $100,000 dollars to start trading with. You can then buy a forex contract which is the method used to buy or sell in forex trading.
If you buy a forex contract you will make a profit of $10 for every one pip movement in forex price, which is 1/100 of a cent, so if the currency pair you have bought appreciates by 1 cent (100 forex pips) you will make a profit of $1,000 i.e. $10 *100 pips. Likewise, if the currency pair you have bought moves in the opposite direction of the trade that you have just opened by 1 cent (100 forex pips) you will make a loss of $1,000 i.e. $10 *100 pips. Forex trading leverage can increase profits as well as losses.
Another advantage of spot forex trading is that you can open a free Forex Demo Account, the demo account is a forex practice account that you use to practice forex trading with - without putting in your money, it uses virtual money to simulate real forex trading. Just like the same way that there is a flight simulator for pilots we have a demo forex account for beginners traders. Traders use the forex demo account to practice forex trading and learn how to trade forex currencies using the forex trading software that is provided to them by their online forex trading broker.
Using the forex demo account traders can login to the forex trading platform - open forex charts - analyze forex price movements using forex trading indicators and use the forex trading platform new forex order option to open trades on the forex trading platform. Forex profits and losses will then be calculated by the forex trading platform based on the currency price movement on the forex trading charts that is provided by the broker. Traders can also learn how to close the open trades using the forex trading platform trading order window using the forex demo account.
Probably the most attractive arguments for the foreign exchange market is that it is accessible to just about anyone and everyone and the fact that you can find virtually thousands of online forex brokers that provide totally free of charge, no deposit, downloadable forex trading platform that enables you as a beginner trader to access the price quotes live using a free demo account makes the forex market available to all.
A demo account provides you with an almost identical experience as the one that you will experience when you start using real money and start forex trading on the live forex trading account. The demo forex account uses the same forex trading software that is used by real traders trading using a real forex trading account, the only difference is that you are using virtual money like the monopoly game money, not real money.
The value of this type of practical experience is invaluable, mostly because it makes it possible for the new beginner traders to discover if or not they got what it takes to make it in the world's largest financial market - forex market. The new investor or the new forex trader can learn, evaluate and test out your their forex trading strategies and forex trading methods for many days, weeks or months before they decide they are ready to get started in forex trading with real money.
However, before you start to invest in forex trading, you need to learn the different forex trading terms and the forex trading strategies used. On this Learn Forex Trading Website is where you can learn everything about forex trading and learn how to practice trade on a demo forex account within a month or two of forex trading learning and forex trading practice you will have enough knowledge to decide f you want to start forex trading online using real money on a live forex trading account. Browse to our learn forex trading basics lessons section and start learning how to make money in forex trading.
Benefits of Forex Trading over Stocks Trading
• Deal directly from live forex price quotes
• Instantaneous trade transaction execution and confirmation
• Fast and efficient execution of forex trading deals
• Lower transaction costs in forex trading
• Real-time profit and loss analysis if trades
• Full access to forex data and forex trading information
Deal directly from live forex price quotes
Online forex brokers are able to offer their clients real-time bid/ask forex quotes, which facilitates instantaneous trade transaction execution and no missed trade opportunities. Streaming forex prices also allow forex investors and traders to compare an online forex broker’s dealing forex spreads to ensure they are receiving the best possible forex price on all their trade transactions.
In the stocks trading - stock brokers require their clients to request a price before dealing. This is disadvantageous for a number of reasons, primarily because it significantly lengthens the execution process from just a few seconds to possibly as long as a minute. In a fast paced forex trading environment, this could make a significant difference in an investor’s profit potential.
Instantaneous execution and confirmation of forex orders
Timing is everything in the fast-paced forex trading currency exchange environment. Online trade transactions are executed and confirmed within seconds, which ensures that traders do not miss any trading opportunities. Even the incremental extra time it takes to complete a trade transaction over the phone can mean a big difference in profit potential. Online trade transactions are executed and confirmed within seconds, which ensures no missed trade opportunities.
Lower transaction costs
Simply, executing trade transactions electronically reduces manual effort, thereby lowering the costs of doing business. Online forex brokers are then able to pass along the savings to their client base. Executing trades electronically reduces manual procedures, therefore lowering the overall costs of doing business. Online forex trading brokers are then able to pass along the benefit of low transaction costs to their clients.
Investors also have the ability to execute trade transactions of between $100,000 and $10,000,000 at the same prices as the Interbank market offers for deals that are over $100,000,000. This benefits those who wish to speculate on the direction of the forex currencies prices for profit.
Real-time profit and loss analysis in forex trading
The fast-paced nature of Forex trading compels traders to execute multiple forex transactions each day. It is vital for each client to have real-time information about their current trade position in order to make well-informed forex trading decisions. Investors and traders can access this information and reports about their current open trade positions thus helping them to make informed forex trading decisions.
Full access to forex market information
Access to timely and relevant forex trading information is critical. Professional Investors pay thousands of dollars each month for access to major information providers. However, the very nature of the internet affords users free access to reliable information from a variety of online sources, including streaming forex price quotes, international news, government-issued economic indicators and reports, as well as subjective information such as expert commentary and analysis, forums etc.
In forex trading, information is readily available from a variety of sources, such as forex brokers and resources such as economic calendars.
Real-time forex price quotes, international news, economic reports and indicators and forex technical analysis reviews are all available on the internet.
24-hour Access to the forex market
The main advantage of forex trading over stocks trading is that it is open 24 hour where there are always buyers and sellers actively participating at any time of the day or night 5 days a week.
High liquidity in the forex market
Forex market has an average turnover volume of over $7 trillion per day, and it is the most liquid financial market in the world. This means that a trader can enter or exit trades at any time in any time, and there is very minimal execution barriers and no daily transaction limit.
A forex leverage ratio of up to 100:1 is typical in the FX market as compared to a leverage ratio of 2 ( or a 50% margin requirement) for equities and stocks. This also makes participating in the currency exchange market a double-edged sword as the high forex leverage makes the risk to the down side loss greater in the same way that it makes the profits potential on the up side more attractive.
Always a profit making opportunity
Forex trade transactions involve buying or selling one currency against another. Thus, there is always a chance to make profits, in a bullish forex trend or a bearish forex trend. Investors and traders can always make money in a bullish forex trend or bearish forex trend, by either buying a currency that is appreciating or selling the one that is depreciating.
The network of the of a global inter-bank network of forex dealers, forex liquidity providers and commercial banks, which communicate with each another on behalf of their clients through electronic networks and telephones - which provides clients with interbank execution of forex market orders. There isn’t an organized central exchange to serve as a central location to facilitate forex trend transactions executions the way that the New York Stock Exchange serves the equity markets.
Foreign exchange trading operates in a manner similar to the way that NASDAQ in the United States operates, and it is thus also referred to as an “over the counter” market or OTC market.
No one can corner the forex market
Foreign exchange is so enormous and with so many forex participants that no single entity, not even a central bank, can control the foreign exchange prices for an extended period. Even the interventions by major central banks are becoming increasingly short-lived, and thus central banks have become less and less inclined to intervene or to manipulate the prices.
Advantages of Forex Trading For New Beginners
Another advantage is that FX gives the new investor or new forex trader looking to uncover their trade strategies and trade methods is the simplicity of entry into this market. The field of stocks is dominated by a few select online brokers who have jointly decided that $3,000 is the minimum amount that they are going to accept for them to open a stocks trading account and even at these levels, the level of services is even decreased.
In contrast there are many Online Forex Brokers who have established Micro forex accounts which allows for small level of risk by placing trades on the forex market using what is known as forex micro lots. These micro accounts extend the access of the foreign exchange market to investors and retail traders seeking to invest with minimum capital. Forex beginners can start with funds as little as $100. Moreover, these deposits can be quickly and easily transferred via a credit card or debit card and other payment methods, while the vast majority of online stock broker deposits require a wire transfer deposit.
It is for this reason that the Forex market is preferred to stock market because it is much more accessible to the retail investors and retail traders as compared to stocks market and it has certain unique factors that offer potential opportunities for more profit than in any other financial market. Beginners can take advantage of the price fluctuations to make profits from these forex currency price movements.