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Posts Tagged ‘how trade forex’
5 Reasons why Forex trading is better than trading Stocks
While Forex trading is becoming more popular in the through out the world, the vast majority of investors still do not understand the massive advantages offered in the foreign currency market when compared to equities or fixed income trading. When you fully grasp the following concepts, you’ll understand why you might want to reconsider your current investment strategies.
1. Currency prices are not heavily influenced by institutional investors
. In stock trading, there is a limited amount of volume on a daily basis. Each stock has a specific number of shares on the open market and trade prices are governed by the number of people attempting to buy or sell shares at a specific point in time. This makes the market vulnerable to price swings when a large investor is attempting to buy up or unload large amounts of shares. For example, if some pension fund owns 10% of a company and suddenly decides to liquidate their position, the market is now flooded with sell orders. Since the amount of shares attempting to be sold will outnumber the amount of buy orders, the price of the stock will start to drop as the number of buyers days up. This creates losses for the remaining shareholders. On the other hand, the forex market is so massive and has so many investors that no single investor can possibly have a major impact on pricing. There are too many units of Euros, Dollars, Yen, etc for any single institution to hold even close to a controlling interest in any currency.
2. Margin requirements are significantly lower in forex trading than equity trading.
While the exact amount of margin allowed is determined by each broker, the restrictions are usually much less stringent when trading forex. Margin allows the investor to “play with house money.” In essence, you’re borrowing money from the broker to invest in your own account. While this can be risky, it can also be insanely profitable.
For example, let’s say you have $10,000 of your own money to invest. If you open up a margin account at an equity broker, you can usually margin up to 50% of the value of stock. So if you buy $10,000 in Microsoft stock, you can borrow another $5,000 to own a total of $15,000 in value. With your forex account, the margin requirement is often as low as 1%. Which means that if you buy $10,000 in Euros, you can use your broker’s money to buy another $1,000,000. So you now own over $1 million in Euros. Now lets say that the value of each investment increases 10%. Your $15,000 in Microsoft stock is now worth $16,500. You sell it, pay back the $5,000 you borrowed, and you pocket $1,500 in profit (minus any fees or interest). Your return on investment is 15%. If your Euros went up 10%, your $1 million is now worth $1.1 million. After selling and repaying your broker, you profit $100,000 before anyinterest. That’s a return on investment of over 1,000%.
Of course, you need to be extra careful when trading on margin. Imagine if the transaction went the other way. You’d be in a much bigger hole in the forex scenario. But the potential for enormous gain is there and is one of the major reasons why forex trading is so attractive to serious investors.
3. Forex trading is open 24 hours a day.
Unlike the U.S. stock markets, you can trade forex any time of day from Monday through Friday. If a major news story breaks when you’re holding stock, and it’s after hours, you’re stuck holding onto your position until the market opens the next day. By the time this happens, everyone else knows the news and there’s thousands of buy/sell orders waiting when the opening bell rings. This will dramatically influence your trade price and negate any advantage you might have had by being one of the first to react. Keep in mind that many corporations withhold major news such as earnings reports and personnel moves until after the market closes. They do this to minimize emotional trading, which is smart for them to do but also hurts savvy investors. Since Forex trading is open 24 hours, you can place your trade order whenever major events occur.
4.The foreign exchange market is more liquid than the equity market
. Forex is the largest market in the world. Every day, an average of 3.4 trillion dollars is traded, and the amount of securities (foreign currencies) is minuscule when compared to the number of companies traded in the equities market. This means that there are always buyers to be matched with sellers, which means that you’ll have a much better chance to get a fair and accurate price on your trade than if you were trading a low volume stock where the bid and ask spreads can be very large.
5. Forex trading offers the advantage of limited risk.
This is one of the large advantages over the futures market. When you buy a futures contract, you are obligated to buy or sell a specific amount of a specific commodity at a specific time for a specific price. Which means that if disaster hits, you’re out of luck. For example, lets say you buy a futures contract to sell corn. If news breaks that reports an outbreak of deaths caused by a pesticide used in corn crops, the price on your contracts will drop through the floor, limits will drop, and you could be stuck in your position and end up taking massive losses. This would not happen in the forex market since you can leave your position at any time.
Profiting Online, Mean Earns style!
Welcome to Mean earns and this would be my first post on this blog. So I wanted to give a good overview of what’s coming your way in the next few months. You already know that a substantial portion of the human population spends a great deal of time on the internet with the stats going to over 20 percent. with access to such a medium of communication, it offers you some real convenience compared to say your average day job and an unlimited space to expand your online exposure! You can basically start off the methods I provide without any prior knowledge in the fields. It will be a learning as you go process and where necessary I will provide you the resources to gain the necessary ideas and skills
But, that is not to say that it is going to get much easier. I’ve grown up with the evolution of the internet and all that followed with it. The online gaming and Multimedia explosion, online shopping and the Overall information over dose. Yes, you guys all know this stuff. But a good part of the people haven’t yet uncovered the real methods of money making that bring your the best dollar per time put-in. Yeah if you search online for earn money from home you’d get a whole list of survey and form filling that promise to make you 2000 dollars in a couple of hours but when it comes down to the end of the day, you hardly make any money through that sort of deals at all, In fact more often than not you wouldn’t see a single cent in your hand. My main focus here is to bring to you the Power tools of making money online. Here are my major playing fields.
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Forex Trading
(foreign Exchange- Forex)
This is definitely my number one when it comes to online income. If you are not really familiar finance terms like and abbreviations, you be, as most people are, too intimidated to start Forex, or for that matter even to see what it really is. Well, yes there’s the lingo and a few concepts that you have to take into mind, but I am here to help and I will pull together a series of online posts that will see you through to becoming a brilliant foreign exchange trader, with insight into the actually working of the system. My discussions here will cover:
- how to go about market analysis fundamental and technical
- Reading and spotting trend patterns
- which indicators work for you
- Online tools that you cant do without
- Forex lingo and the mumbo jumbo
- trading strategies
- keeping your head together (Very Very important!)
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Affiliate Marketing
Affiliate marketing is basically being an advertiser and is one of the most lucrative risk free methods of profiting online, this probably the best method if you are planning to profit on the long haul. To become a successful affiliate marketer you need a good deal of research, planning and some marketing out look. most people do it wrong, they just put up advertising banners on their web page and expect a good click through turn over. i will teach you how you should approach affiliate marketing with a with stealth, a method I’ve learnt can never fail. You need to give some though to what sort of products or services best go with your site and what keyword bring in the most traffic. Things like this should give you a good understanding of what your readers are actually after.
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Domain Flipping/Parking
Domain flipping is the cyber space equivalent of the real estate and as with any good real estate involves quality. Domain names are the web address of sites for example www.google.com which is the domain name for Google. The quality of a domain name involves many factors such as the length and the number of words in the name, brand-ability (Google started out sounding like “G-o-o-g-l-e” but now with the name so well branded into our heads, Google mean a giant company,or a search engine) and also the amount of traffic that comes in. What domain flippers actually do is to but a nice looking domain name, “develop” it as in, bring in more traffic and increase the brand value and so on then sell it off the to a much much better price. I’ve done some sales but the nest so far is the Domain name I registered for only 9.98$ and then sold off for 2000$ in three months. This is definitely worth a shot and I will give you some good advice on how to get around doing this.
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Blogging and Websites
Having at least one blog or website is essential if you want to be a good dealer online. If you don’t have one then its like having a company with no offices, any customers who’d be interested in making some would be put off by the fact. Also Websites and blogs can be very profitable too, You could make a good amount through advertising and affiliate marketing on your site, I will give you in-depth details and step by step guides to how you can have your own website on the net in a matter of fifteen minutes. Having a website isn’t actually the entire story, you need readership and a good visitor base, let me show you how you could multipy your organic traffic, and let your profit soar.
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Drop shipping
Drop shipping is basically selling product online. The difference is that you don’t have to deal physically with the product at all. Say you are promoting sales on eBay for iPhones, what you do is to you contact a dealer that handles the product, and you give the details of the buyers that have come to you to purchase the iPhone. So you can be in Inner Mongolia and still sell Gucci from Paris to customers in the Bahamas! Detailed posting are to follows soon.
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Others
The REAL money making opportunities available online are endless you’ve just got be looking in the right places. If you are a designer you can put up you online store for you designs be it t-shirts, mugs or website templates. There are service providers who will do the rest of the work for you, like printing the shirts and the product delivery, all you need to do is to give them the designs.So folks, this is your opportunity start your own online profiting methods, I will give you all the support you need free of charge. In fact I am feeling so generous, I will pay you to start some of these methods using my site, all that and more is coming your way in the next months, so make sure you subscribe to my feeds and share this blog with your friends and family so they can join in with you on your MEAN earns online!
