Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

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.


© 2005-2019 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