Articles about Forex
Forex Broker: Choosing the right Forex Broker
Sometimes it's hard to make a decision on which Forex broker to open our trading account, there are just too many of them. Most of them have different features, capabilities, weaknesses and advantages, for this reason I have created a checklist that can help you decide the broker to use in your Forex adventure.
1. Is it regulated?The first question you have to ask yourself is: is the broker I want to use Regulated ? There must be no doubt about this first point. All regulated brokers must submit financial reports to regulatory authorities, and when they fail to do it, authorities have the right to fine them or terminate their membership. This enforces Forex brokers to keep transparent financial reports.
The brokers must be regulated by their local regulatory authorities, for instance, for brokers based in the US, they must be regulated by the NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission), Swiss based brokers must be regulated by the FDF (Swiss Federal Department of Finance) and so on.
Also when a Forex broker is regulated allows investors to dispute any resolution, increasing the investor protection.
2. Trading Conditions
This point refers to the features of the trading platform and the trading conditions with the chosen broker. Amongst the most important factors are:
Spread - Obviously the smaller the spread on currency pairs the better the conditions are for investors and traders.
Platform execution- Trading execution refers to how fast and consistent are the execution of trades. Some brokers guarantee fast and transparent executions during normal market conditions.
Fractional trading - Some brokers allow investors and traders to trade on a fractional basis, instead of trading full lots "100,000 units" or "300,000 units", they allow you to trade "163,345 units" or "325,911 units". This is very helpful for trades risking certain percentage of their balance on each trade.
Safety of funds - We need to make sure our trading funds are kept in a segregated account or at least insured.
How To Get Started In Forex Trading
You may have been hearing about the foreign exchange market (Forex) and the investment advantages it offers. You would like to try it out, but don't know where to start. This short guide will give you the basics in Forex and tell you what you need to participate in this fast growing field. Foreign exchange used to be limited to large players such as national banks and multi-national corporations. In the 1980's the rules were revised to allow smaller investors to participate using margin accounts. Margin accounts are the reason why Forex trading has become so popular. With a 100:1 margin account, you can control $100,000 with a $1,000 investment. Forex is not simple, however, and education is needed to make wise investment decisions. Although it is relatively easy to start trading on the Forex, there are risks involved, so finding out as much as possible about the market is a good move for any beginner. Forex traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices. Opening a Forex account is as simple as filling out a form and providing the necessary ID. The form will include a margin agreement that states that the broker can interfere with any trade it deems to be too risky. This is to protect the interests of the broker � most trades, after all, are done using the broker's money. Once your account has been established, you can fund it and begin trading. Many brokers have different types of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in Forex trading for as little as $250, while standard accounts may have a minimum deposit of $1000 to $2500 depending on the broker. The amount of leverage � using borrowed money � varies with accounts. High leverage gives you more money to trade for a given investment. HOWEVER � beginner traders are advised get accustomed to Forex by doing paper trades for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are at provided by most Forex brokers. Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new Forex investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits. Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all Forex brokers. Real time quotes, news feeds, technical analyses and charts, and profit and loss analyses are some of the features you should expect to see on most online brokers' web sites. Almost every broker operates on the Internet. To access their online services you should have a reasonably modern computer, a fast Internet connection, and an up-to-date operating system such as Windows XP. Once your account is set up, you can access it from any computer � just enter your account name and password. If for some reason you are not able get access to a computer, most brokers will allow you to make trades over the phone. Trades are commission free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. Brokers make their money on the 'spread' � the difference between bid and ask prices. by Hana Lee
Tips on Forex Trading
Forex online currency trading actually works on the very basic principle of currency projections. You can make money by buying foreign currencies on a cheap rate and selling them at a higher one to make a profit. Like if you can make a profit of 2 cents per Euro if you have bought it for1.52 USD per Euro and sold it at 1.52 USD per Euro. Though this method of making money is popular among the moneychangers, traders and speculator also use it. Traders and speculators predict the market fluctuation and determine the currency projections from that fluctuation. Suppose a speculator gets the currency projections that a particular currency will be in demand for the next few weeks. Learn how to open a Forex trading account with $50 by clicking here He will buy a lot of that currency before the exchange rate increase and sale his reserve when he deems that the exchange rate is the highest to make a good profit. This is how the right currency projections help them to make a lot of money. The method depends highly if not entirely on currency projections. One can lose a lot of money in Forex currency market due to its unpredictable nature of not following the currency projections. There are other factors that play an important role other than currency projections like disposition of the head of state. The market reaction to currency projections often varies. Miscalculating those signs to currency projections can result in losing a lot of money. Short selling is where speculators often make mistakes. Short selling is selling currency that is not in the persons reserve but intends to get at a future date when the price is down by following the currency projections. Especially during the onset of stock market crises and currency projections, short selling results in bankruptcy for a lot of people.
Advantages Of Forex Trading
Forex trading has its own advantages over other types of trading. The fact that trading in different currencies does not take place in a centralized market unlike other trading options makes it quite an advantage in itself. Here are other advantages that trading in currencies offer. One of the major advantages of forex trading is that it provides the opportunity to trade on a 24 hour basis. Trading in forex can start as early as Sunday evening at 20:00 GMT as late as Friday evening 22:00 GMT. This schedule gives traders from all over the world the welcome opportunity to react instantly to breaking news and information that greatly affects the markets and go through with deals that offer the most gains. Another advantage of the forex market over other trading markets is that it exists in an environment with high liquidity. The forex market is so liquid that there won�t be a lack of buyers or sellers to trade with. This helps ensure price stability and narrow spreads within the market, most especially for those of the major currencies. It is the banks that provide liquidity to investors, companies and other market players in the currency trade. Another major advantage of forex trading is that the profitability of the deals is not being diminished by commissions paid to agents, etc. Every deal and transaction sealed and approved almost always comes without both parties having to pay hefty commissions. It is this fact that makes currency trading very attractive as an investment opportunity for investors who want to trade in currencies on a more frequent basis. Leverage is another major advantage of trading in currencies. Leverage or gearing allows participating traders to hold a position that can be worth up to 100 times more than the margin deposit made. To cite an example, a USD 10,000 deposit can command positions in forex trading for up to USD 1,000,000 by way of leverage. In forex markets, it is possible to leverage the first USD 25,000 of a traders investment a hundred times and additional collateral for up to fifty times the actual value. Another distinct advantage of trading in currencies is that there is profit potential even in falling markets. Since the forex market is constantly in motion, there are always trading opportunities available. Anywhere in the world, there is a currency that is either strengthening or weakening in relation to another country�s currency. In forex trading, currencies work against each other. When a major currency weakens, it is because one of the other major currencies is strengthening. Falling currency rates may provide traders with buying signals for a possible increase in rates
