Online Foreign Currency Trading Basics-Education
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Dear
clients and students of the foreign currency markets, the following
information should answer all of your questions about online foreign
currency trading. You may also call 800-915-4716 or email
contact@tkfutures.com
your online foreign currency trading questions.
Online Foreign
Currency Trading Basics- Education
Forex
(Foreign Exchange) is the name given to "direct access" foreign
currency trading. With an average daily volume of $1.4 trillion,
online foreign currency trading is 30 times larger than all of the futures
markets combined and for that reason, is the world's most liquid
market.
In the past,
online foreign currency trading was limited largely to
huge money center banks and other institutional traders. But in
just the past few years, technological innovations and the
development of online foreign currency trading platforms has allowed
small traders to take advantage of the significant benefits foreign
currency trading, a.k.a. foreign exchange, forex and FX trading.
Begin online foreign currency trading right now, risk free.
If
you are an investor now, or would like to become one, online foreign
currency trading has significant advantages over other types of
investments.
For
one thing, it is remarkably easy to get started. All you need to do
is open up a foreign currency trading demo account with $50,000 in
virtual capital to start playing around with it and decide if
online foreign currency trading is for you. You can begin trading
immediately with zero risk, live quotes, live news and the same real
time profits or losses as if you were investing in a
real online foreign currency trading account.
(open a demo account
now)
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trading using the forex option demo account.
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to begin your 14 day forex
option practice account.
Benefits of Online Foreign Currency Trading vs. other
investments
Online foreign currency trading is similar to the futures markets in that
investors are able to control large amounts of assets for a
relatively small deposit, or margin. As with all investments,
without proper risk management, high degrees of leverage can lead to
large losses as well as gains. The leverage in online foreign currency
trading is greater than a stock bought on margin and a typical futures contract. For a deposit of
just $1,000 an investor can leverage $100,000 worth of foreign
currency or $100 leverage for every $1 invested. Buying a stock on margin
only allows $2 leverage for every $1 invested and a typical futures
contract allows around $15 leverage for every $1 invested.
Secondly, because you
access the foreign exchange markets directly through an online
foreign currency trading platform, you pay zero exchange fees. And like futures, you
can roll over foreign currency positions indefinitely. Online foreign currency trading is a 24 hour market that literally follows
the sun around the world, allowing you to trade when you want to.
Unlike stocks, there are no
restrictions on short selling in online foreign currency trading. Sell or
buy-it doesn't matter which way you play the market when you invest
in foreign currencies.
And finally, the huge number and diversity of investors
involved in online foreign currency trading make it more liquid than both
stocks and commodities.
More
Online Foreign Currency Trading Basics
In
the online foreign currency trading market, currencies are always priced
and traded in pairs. You simultaneously buy one currency and sell
the other. Let's assume you believe the value of the Euro is going
to increase versus the US Dollar. You would buy one EUR/USD
position. The objective of foreign currency trading is to exchange
one currency for another in expectation that the market rate or
price will change so that the currency you bought (EUR)has increased in
value relative to the one you sold (USD). To lock in a profit you must
then sell one EUR/USD to close out or offset the position.
Understanding Online Foreign Currency Trading Quotes
Online foreign currency trading quotes
show the first currency in the pair which is
referred to as the base currency, and the second currency is the
counter or quote currency. The US Dollar is usually considered the
base currency for quotes, and includes USD/JPY, USD/CAD, USD/CHF.
JPY=Japanese Yen, CAD=Canadian Dollar, CHF=Swiss Franc. This means
that quotes are expressed as a unit of $1 USD per other currency
quotes pair. The exceptions are the Euro (EUR), Great Britain Pound
(GBP) and the Australian Dollar (AUD).
What is the "Bid" and the "Ask" in online foreign currency trading?
As
with all financial products, online foreign currency trading quotes include
a "bid" and "ask". The "bid" is the price at which a market maker is
willing to buy (and you can sell) the base currency in exchange for
the counter currency. The "ask" is the price at which a market maker
will sell (and you can buy) the base currency in exchange for the
counter currency. The difference between the "bid" and the "ask" is
called the "spread". The spread is how the market maker and the
introducing broker are compensated for their efforts.
What are
the risks in foreign currency trading?
Foreign currency trading carries substantial risk of
loss. Only risk capital should be used in foreign currency trading
accounts. Online foreign currency trading occurs in the cash market and not
on an exchange.
Opening a live online foreign currency trading account is easy.
Once
you have decided that online foreign currency trading is right for you, it
is just like learning to ride a bike. You just have to start.
Eventually you take the training wheels off (demo account) and ride
for real. With foreign currency trading that means putting real
money into a live trading account (open a live
online foreign currency
account), and begin online foreign currency trading for real.
Do you offer any professionally managed
forex trading funds?
Yes, we offer several. Visit
managed forex trading or
contact us at
tkfutures@earthlink.net and we will send you the funds' track
records and specifications.
You can also
visit our sister website at
www.uplimit.com to learn even more about investing in Forex.
Visit
forex online trading to learn more
frequently asked questions, FX
options trading and managed
forex trading to learn about FX options. SITE
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