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About
Futures Trading
About
Forex Trading
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Advantages
of Trading Forex vs. Stocks
You can profit in an up or down market.
Unlike the equity market, with forex there are no restrictions on short
selling. Profit potential exists in the currency market regardless of
whether a trader is long or short, or which way the market is moving.
Since currency trading always involves buying one currency and selling
another, there is no structural bias to the market. This means a trader
has an equal potential to profit in a rising, or falling market.
You pay
NO commissions.
Trade Center Inc. charges zero commission or transaction fees to trade
currencies online or over the phone. In the equity markets, you must pay
both a commission and a spread. The over-the counter structure of the
forex market eliminates exchange and clearing fees, which in turn lowers
transaction costs. Costs are further reduced by the efficiencies created
by a purely electronic market place that allows clients to deal directly
with the market maker. Because the currency market offers round-the-clock
liquidity, you receive tight, competitive spreads both intra-day and night.
Stock traders are more vulnerable to liquidity risk and typically receive
wider trading spreads, especially during after hours trading.
You get
up to 50 times the leverage… and potential profits… of trading
stocks
Trading forex with Trade Center Inc. gives you up to 50 times the leverage
of trading stocks. In stocks, for every $1,000 cash you invest, you control
a maximum of $2,000 worth of stocks. The leverage is 2 to 1. But with
forex, if you invest $1,000 margin on a foreign currency trade, you can
control up to $100,000 in currencies.
You can
make money on ordinary news items, like changes in interest rates
If the market has uncertainty regarding interest rates, then any bit of
news regarding interest rates can directly affect the currency market.
Traditionally, if a country raises its interest rate, the currency of
that country will strengthen in relation to other countries as investors
shift assets to that country to gain a higher return. Hikes in interest
rates, however, are generally bad news for stock markets. Some investors
will transfer money out of a country's stock market when interest rates
are hiked, causing the country's currency to weaken. Determining which
effect dominates can be tricky, but generally there is a consensus beforehand
as to what the interest rate move will do. Indicators that have the biggest
impact on interest rates are PPI, CPI, and GDP. Generally the timing of
interest rate moves are known in advance. They take place after regularly
scheduled meetings by the BOE, FED, ECB, BOJ, and other central banks.
You can
easily and quickly diversify out of U.S. dollars
The trade balance shows the net difference over a period of time between
a nation's exports and imports. When a country imports more than it exports,
the trade balance will show a deficit, which is generally considered unfavorable
to that nation's currency. Many investors know that they should diversify
some of their assets into foreign currencies, but to do so is difficult.
Most U.S. banks, for example, do not offer foreign currency accounts.
But by trading forex, you instantly control hundreds of thousands of dollars
worth of foreign currencies. For every $1,000 margin deposit, you can
control up to $100,000 worth of Euros… or British Pounds…
or whatever currency you believe will rise in the future.
If you
like technical trading, forex is perfect for you
Unlike stocks, currencies rarely spend much time in tight trading ranges
and have the tendency to develop strong trends. Over 80% of volume is
speculative in nature and, as a result, the market frequently overshoots
and then corrects itself. A technically trained trader can identify new
trends and breakouts, which provide multiple opportunities to enter and
exit positions.
You can
analyze countries like stocks
Currencies are traded in pairs so if a trader "buys" one currency
he is simultaneously "selling" the other. As with a stock investment,
it is better to invest in the currency of a country that is growing faster
and is in a better economic condition. Currency prices reflect the balance
of supply and demand for currencies. Two primary factors affecting supply
and demand are interest rates and the overall strength of the economy.
Economic indicators such as GDP, foreign investment, and the trade balance
reflect the general health of an economy and are therefore responsible
for the underlying shifts in supply and demand for that currency. There
is a tremendous amount of data released at regular intervals, some of
which is more important than others. Data related to interest rates and
international trade is looked at the closest.
You can
trade 24 hours a day
After-hours stock trading is not a very liquid or easy market to trade.
But with forex, you can trade 24 hours a day -- in the largest, most liquid
market in the world. That means you never have to "just say no"
to trading.
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