The old adage that ‘trend is your friend’ is perhaps more suited to Forex traders than any other kind of investor. Knowing the trend can save the forex trader from making disastrous investment decisions and also ensure that he tweaks his exposure to the market in time to leverage opportunities or avert serious capital erosion. What is surprising is that even traders who have spent many months in this market end up making rookie mistakes that cost them heavily. In a vast majority of these cases, the trader’s fault lies in his failure to identify and/ or understand the market trend correctly.
Think of forex leverage as a bank loan with interest. The idea sounds fantastic, until you learn the conditions and requirements! In trading, leverage allows you to gain access to a huge investment funds in currencies with a small initial deposit amount. For example, leverage of 1:200 makes rather miserable $100 turn into an attractive $100x200=$20,000 of tradable currency.
Commodity and forex markets are among the most lucrative and exciting markets where you can trade. For the same reason, they are preferred by many. Now, whether you choose to trade in commodities or forex is entirely up to you. But before you do make a choice, it is imperative that you know the differences between them. Here are a few factors that will help you understand the differences between forex trading and commodities trading.
Why are you trading that? What was the criteria you used to select the currency pair or pairs you trade? Most traders start out trading the most popular pairs such as the EUR/USD, USD/JPY and GBP/USD. Often their decision is based upon where they live as well as knowledge of underlying economies connected with currency pairs. As traders gain experience they will trade a wider variety of pairs-scanning charts for trading opportunities. However, after a few years of trading, most retail traders will settle on a few pairs or even a single pair to trade.
The era of the Central Banks began in 1913 with the founding of the U.S. Federal Reserve. There were central banks before that exercised immense power-particularly the Bank of England-but the economic influence of the USA and the Fed, was like nothing before. Moreover, the U.S. Fed-a private institution-was given a more independent role than other banks, as well as a dual mandate. Today, the U.S. Fed continues to be in the driver’s seat of the global economy with an unparalleled influence on the valuations of currencies.
The idea of a checklist for traders comes from the aviation industry. Every commercial pilot in the world has a preflight checklist they use before they ever start the engines on their aircraft. While trading may not be as complicated or risky as flying a Boeing 747, trading is a complex art that does require memorization of many things.
Contrary to the popular belief, forex brokers do charge commissions and fees for their services. Brokers do not work for free and definitely look for different ways to make profits. There might be no obvious fees for each trading transaction you make, but there are plenty of other ways to get paid.
Your forex broker, for example, may be charging you for rollover rates, bid-ask spread, deposit/withdrawal requests, advanced charting and trading tools and other in-house training services.
Most stay at home moms look for extra income while they take care of the children. While internet offers some solutions, not all of them are very effective. Between selling things on ebay and wasting time answering “paid” surveys, there is something that actually works – forex trading.
You finally start to profit and you are all excited about your just withdrawn cash when it suddenly hits you – what about taxes? How are my profits taxed and where should you report your income? What kind of documents should you fill in and how to keep IRC away from knocking on your door in the middle of a happy sunny day?!
Online forex market has become one of the most popular investment opportunities today. Millions of traders all over the world turn to currency trading in order to create high income. Let’s go over some of the benefits of forex market: