Forex News And Tips A Real Traders Insights
Foreign Exchange is the fastest moving financial instrument. The Foreign Exchange market is also the most liquid and largest global financial market. The Bank for International Settlements reported that daily turnover by April 2007 had reached over US$3 trillion. To put this into perspective, US$3 trillion is ten times the size of the daily transaction volume of all the global equity markets taken together.
Yet despite this huge volume, Forex trading until recently was previously the domain of the Commercial and Investment banks, large private investors, hedge funds and large non banking corporations. With the advancement of the internet, an increasing array of online trading platforms, CFD’s and trading software has now made Forex accessible to the smaller trader.
Why is the Foreign Exchange Market so well suited for the Day Trader ?
There are five important reasons why day trading Forex works better than day trading equities or other asset classes:
Liquidity – The huge liquidity of the Forex market is reflected in a very tight bid / offer spread which can be as low as two pips on the major currency pairs; subsequently, a position can be opened up without paying away the spread; you can also instantaneously buy and sell at will meaning you are never locked into a trade. With tight spreads traders can enter positions for time periods even as short as minutes and hours.
Market Transparency – Out of all the financial markets, The Foreign Exchange market offers the highest level of market transparency. Because of this, order executions and fill confirmations occur within seconds. Thanks to its efficiency, there is little or no slippage of market price for the execution of even large orders.
Profit from Rising and Falling markets – There are no restrictions for directional trading in the Foreign Exchange Market – if you think a currency pair is going to increase in value; you can go long, or buy it; if you think it could decrease in value you can go short or sell it.
Gearing – The substantial gearing or leverage available from online Forex trading firms is a powerful instrument. Rather than just loading up on risk as people often incorrectly assume, gearing is essential in the Forex market. This is because the average daily percentage move of a major currency is less than 1%, whereas a stock price could move 10% on any given day. Gearing is the ability to trade more money on the market than what is actually in the trader’s account.
Long trading hours – It is possible to trade the Foreign Exchange Market almost 24 / 7. For European based traders, The market opens late Sunday evening with the opening of the Australian financial day. It ends with the New York close at 10 pm Friday night. The only day you can’t trade is a Saturday.
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