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Thread: Why We Trade Forex

  1. #1
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    Default Why We Trade Forex

    Why We Trade Forex

    Compared to trading stocks, bonds, or commodity futures, the Forex market has some huge advantages:

    Larger and more liquid. It means that faster and better order execution and no one can corner the market. The forex market is so huge and has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. Therfore manipulation against the small trader is not possible.
    Fewer ‘tradeables’ to learn. You need to look at only 4 dominant currency pairs versus 72 commodities and more than 7800 stocks and bonds.
    No commission and Low transaction cost. There area no clearing fees, no exchange fees, no government fees, no brokerage fees. Brokers are compensated for its services through the bid-ask spread. In addition, the retail transaction cost (the bid/ask spread) is typically less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent.
    Greater leverage (100/1). In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make extraordinary profits and at the same time keep risk capital to a minimum. We will explain this “leverage” in later section.
    A 24-hour market. There is no waiting for the opening bell. This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade--morning, noon or night.
    Less money need to start and maintain a trading account. Online Forex brokers offer "mini" trading accounts with a minimum account deposit of $300. Some brokers offer less than that. This makes Forex much more accessible to the average individual who doesn't have a lot of start-up trading capital.
    Pure technical Analysis. Forex work best on pure technical analysis – no fundamental rules or insider tips needed.
    Furthermore, the high tech brokerage companies that make Forex trading available to you the trading platform, live quotes (buy and sell prices) and data feed for free, as well as many market analysis techniques built in, split-second response time to your orders, display of the profit/loss status of each trade as it is happening, and provide demo-trading and min-accounts for learners. What you need is a computer with a reasonable Internet connection speed.

    Example of Forex Trade

    The EUR/USD is always quoted as two numbers which are bid and ask prices. For example, the bid/ask of EUR/USD is 1.0120/1.0126, meaning you can buy 1 euro (EUR) for 1.0126 US dollars (USD). (But if you would sell 1 euro (EUR), you would get 1.0120 US dollars. )

    Suppose you feel that the EUR is undervalued against the dollar. To execute this strategy, you would buy Euros (simultaneously selling Dollars) and then wait for the exchange rate to rise.

    So you make the trade: purchasing 100,000 EUR (1 lot) and selling 101,260 Dollars. (Remember, at 1% margin, your initial margin deposit would be 1,000 Euros.) We will explain about margin later.

    As you expected, EUR/USD rises to 1.0236/42. Since you bought Euros and sold Dollars in your previous trade, you must now sell Euros and buy Dollars (or another term is to close your position) to realize any profit. You can now sell 1 EUR for 1.0236 Dollars. When you sell the 100,000 Euros at the current EUR/USD rate of 1.0236, you will receive 102,360 USD.

    Since you originally sold (paid) 101,260 USD, your profit is US $1100.

    Long/Short

    Before executing any trade, you should determine whether you want to buy or sell. If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position". Just remember: long = buy. When you buy, you will be using the higher quoted (bid/ask) price.

    If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position". Short = sell. When you sell, you would be using the lower quoted (bid/ask) price.

  2. #2

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    Forex markets are much better than the stock markets as they are more predictable and the rates are not controlled by any agent / broker, in the stock big brokers and make market movement change which is risk for investors.

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    forex is a business that has many advantages. as a highly flexible, small capital is a bit of a forex gain very much. because many are choosing forex, and I choose forex because flexible hours. let alone to start forex does not require a large capital like in tenkofx we can trade with a capital of $ 10

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    Forex (short for FOReign EXchange) is the international currency market. It exists whenever one currency is traded for another and, as such, it is by far the largest financial market in the world. There is no single unified trading center: Forex is an off-exchange market, i.e. it has no geographical location. Trading is carried out through global telecommunication systems, via the Internet and the telephone system.

  5. #5

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    this market is place where we can earn money. this market can give us a job. it can be part time or full time. if you have big money it can be business for you.

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    I think Forex is a very profitable business. forex is a business that is different from the others. to start forex we do not need a big capital we can trade with small capital like $ 10 in tenkofx. and with flexible time will make it more attractive forex. we can trade anytime.

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    Why we are trade in forex? I trader in forex because i'm interested with forex, when my friend tool me about it, i try to learn about forex. He told me that i can use demo account and deposit in small amount to start trading in forex. And even in FreshForex, trader can use small amount as they wish.

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    The idea is to work for yourself on the international money market – to become a successful trader.There is no single unified trading center: Forex is an off-exchange market, i.e. it has no geographical location. Trading is carried out through global telecommunication systems, via the Internet and the telephone system.

    As soon you have access to the Internet you have access to trading.

  9. #9
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    Quote Originally Posted by trading_system View Post
    The idea is to work for yourself on the international money market – to become a successful trader.There is no single unified trading center: Forex is an off-exchange market, i.e. it has no geographical location. Trading is carried out through global telecommunication systems, via the Internet and the telephone system.

    As soon you have access to the Internet you have access to trading.
    That's why there are many traders who are interested to trade in forex because it's flexible. We can trade any time and any where we want. We just need to PC and internet connection for trading But surely we must have skills. Try to use demo account to get experience about forex

  10. #10
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    Quote Originally Posted by Lucien View Post
    That's why there are many traders who are interested to trade in forex because it's flexible. We can trade any time and any where we want. We just need to PC and internet connection for trading But surely we must have skills. Try to use demo account to get experience about forex
    Forex is a business that is flexible, we can choose as a full time trader or part time trader. I have now included a part time trader in TenkoFx

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