Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18
US Stocks Set For Further Advances As Q2 Earnings Start - 15th Jul 18
Stock Market vs. Gold, Long-term Treasury Yields, 10yr-2yr Yield Curve 3 Amigo's Update - 15th Jul 18
China vs the US - The Road to War - 14th Jul 18
Uncle Sam’s Debt-Money System Is Immoral, Tantamount to Theft - 14th Jul 18
Staying in a Caravan - UK Summer Holidays 2018 - Cayton Bay Hoseasons Holiday Park - 14th Jul 18
Gold Stocks Summer Lows - 14th Jul 18
Trump US Trade War With China, Europe Consequences, Implications and Forecasts - 13th Jul 18
Gold Standard Requirements & Currency Crisis - 13th Jul 18
Focus on the Greenback, Will USD Fall Below Euro 1.6? - 13th Jul 18
Stock Market Outlook 2018 - Bullish or Bearish - 13th Jul 18
Rising Inflation is Not Bearish for Stocks - 13th Jul 18
Bitcoin Picture Less Than Pretty - 13th Jul 18
How International Observers Undervalue the Chinese Bond Market - 13th Jul 18
Stocks Trying to Break Higher Again, Will They? - 12th Jul 18
The Rise and Fall of Global Trade – Redux - 12th Jul 18
Corporate Earnings Q2 2018 Will Probably be Strong. What This Means for Stocks - 12th Jul 18
Is the Relative Strength in Gold Miners to Gold Price Significant? - 12th Jul 18
Live Cattle Commodity Trading Analysis - 12th Jul 18
Gold’s & Silver’s Reversals’ Reversal - 12th Jul 18
The Value of Bitcoin - 11th Jul 18
America a Nation Built on Lies - 11th Jul 18
China, Asia and Emerging Markets Could Result In Chaos - 11th Jul 18
Bullish Gold Markets in the Big Picture? - 11th Jul 18
A Public Bank for Los Angeles? City Council Puts It to the Voters - 11th Jul 18
Yield Curve Inversion a Remarkably Accurate Warning Indicator For Economic & Market Peril - 11th Jul 18
Argentina Should Scrap the Peso and Dollarize - 11th Jul 18
Can the Stock Market Close Higher For a Record 10th Year in a Row? - 11th Jul 18
Why Life Insurance Is A Must In Financial Planning - 9th Jul 18
Crude Oil Possibly Setting Up For A Big Downside Move - 9th Jul 18
BREAKING: New Tech Just Unlocked A Trillion Barrels Of Oil - 9th Jul 18
How Trade Wars Penalize Asian Currencies - 9th Jul 18
Another Stock Market Drop Next Week? - 9th Jul 18
Are the Stock Market Bulls Starting to Run? - 9th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

An Introduction to Online Forex Trading

Currencies / Forex Trading Mar 10, 2018 - 03:34 PM GMT

By: Kavinesh_A

Currencies

Forex stands for foreign exchange, the currencies. Forex trading is the process of buying and selling of foreign exchange or currencies. Statistics indicate that the online forex trading is increasingly getting more popular and that the forex market has grown at least 20% in the last five years. Grab more information about trading from the Admiral Markets


The way the trader makes money

The forex trade basically works on the principle of borrowed material. That is, there is a difference in selling a belonging of yours and selling a borrowed thing. In forex trade, though you are selling one currency, you are also borrowing from another. That means a trader borrows a currency which is standing at a higher price. When you sell the currency back to the broker, the difference between the two amounts is the profit the trader makes.

Let us take the example of USD/JPY. If it is stipulated that the value of JPY will be going down, then the trader would sell this pair and that means he would buy yemen and sell dollar. In this case, the trader will have to borrow USD from his broker. Now, if it happens as per the stipulation, the value of JPY increases and the value of USD decreases, then the trader would have to return the borrowed dollars to the broker at the low price in which it stands at the end of the day. Since the trader has sold yemen at a bigger price, the difference is the profit that the trader makes.

Checklist needed to have an online forex account

There are many online forex accounts available that can be of use and even brokers. You should choose it carefully and you need to be assured of several factors such as what is the online currency that the account generally is dealing with, then the degree of spreads that the broker charges, the different offers on the currencies that is available, and so on. Do check these factors and then open an account and go about trading.

The broker is your account manager

First, you should decide as to what is the account you require sicne there are many trading currencies available online. Also check the spreads that is charged by the brokers. The spread is the difference that you get between the selling price and the buying price of the currency you have traded in. Choose an online forex trading account that charges a narrow spread as the brokerage. Also, your broker should allow you the freedom to trade in a variety of currencies. Do not restrict yourself to just few. Most importantly, you should know how you are going to manage the account and you should have a deep idea about forex trading. Hence, understand, learn and know the terms and the prices of each currency you have decided to trade in.

The liquidity factor is high: According to the Admiral Markets, the online forex trading platform serves great for all because there is no chance of getting stuck up. Since online forex market is a huge one, you will always find someone at the other end always ready to buy the currency you are selling. The online account also gives you an option as to set it in an automatic mode so that it closes on its own as soon you have reached the profit level you have set.

A comparison of online forex trading with stock trading

Few to look over: In stock trading, you will have to look around at thousands of companies. That also means, if you are not prepared enough, you are going to lose chances of winning or getting profits. Not everyone will have that much time to go over thousands of companies and checking their prices. In online forex trading, there are only dozen currencies or so and that too the majority of the trading takes place in four pairs, known as ‘majors’.

The timing is the key: When it comes to stock market, you will have to put in all the main working hours and the market closes in the evening. That means, it is not possible to trade in a time that you will have at your disposal. Online forex trading is open 24 hours and that means you can choose to trade any time of the day or night. That is one main advantage of online forex trading over stock market.

Your orders are accomplished in real time asap: You trade in real time with online forex trading. You are shown the value of the currency and you can directly trade with the value shown.

No long or short of it: Unlike stock market, in online forex market, there is no limit on short selling. No matter how the trader chooses to go, long or short, he can do so.

Decentralization: In stock market, the exchanges are centralized and that means middlemen are involved and you will have to pay them a cost. The online forex market is decentralized and the traders get access to different quote rates that the dealers present and that means the traders get cheaper costs.

No sale or buying can dictate: In stock markets, it is usually depending on buying and selling. But in online forex trading, these factors do not decide the functioning of the market. None of the buying or selling can dictate as to how the market will function. The liquidity is also high and thus gives an advantage to the trader.

No analysts, experts or firms can influence: In stock market, the opinion of the experts and analysts do matter a lot. Even brokerage firms can play an upper hand. The value of a currency depends on how well or bad the economy of that particular country is doing. Also, foreign exchange is a prime necessity for global markets and brings in huge revenue for financial institutions, especially banks. Thus, analysts and experts can only look at the forex market and give their opinion but they can’t stipulate, predict or cause any effect on the market.

By Kavinesh

© 2018 Kavinesh - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules