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Why More Investors Choose Forex Trades…

Why More Investors Choose Forex Trades…

As more investors grow dissatisfied with the performance of the domestic stock markets, they are beginning to explore some options for international investments. While there are a number of opportunities to get involved in foreign markets, foreign exchange trading is quickly becoming one of the most popular. Investors like forex trades because they are made quickly and with minimal hassle. There are several definable benefits to foreign exchange trading.

The first benefit is that forex is liquid. In fact, forex is the most easily sold form of investment in the world. Since you are dealing with cash, forex trades are never on the block for long. There is always someone, or some bank, willing to make a trade. This liquidity is what makes trading forex so appealing to many. Even in falling markets, you have the ability to sell whenever you are ready.

Another benefit of foreign exchange trading is that forex trades are available 24 hours a day. Since the medium is the world’s currencies, the market must be open 24 hours a day since banks in different time zones are always open. The development of internet technology has opened up a world where trading can happen instantaneously at any time of day. Since many forex traders work full time jobs during the day, the ability to sit at home and make trades in the evening, even after their own nation’s markets have closed, is very important.

Some foreign exchange traders like this platform because forex trades rarely charge any commission fees. When trading regular stocks and even some futures, the investor’s profits take a substantial hit from the commission based fee structure in which the brokerage firm gets a percentage of every trade made. With online forex trading though, these commissions are not applicable as you are making the trades yourself. It may seem like small change, but over the course of a year, many forex traders find that they have increased their portfolio substantially because they are able to invest the money that normally would have gone to commission fees.

Investors who limit their portfolios to domestic common stock often find that their trading activity must come to a halt in a declining market. You may hear them talk of “riding out the storm.” For those who make forex trades however, the normal rise and fall of the world’s economies does not affect the nature of the trading. Forex trades depend only on the exchange rate. The actual value of the currency doesn’t matter. For this reason, you will see that foreign exchange trading remains active even when trade volumes of common stock are very low.

Author: Lorna Goldsborough
Website: http://www.forextradingexplained.co.uk

Welcome To The World of Forex Trading…

Welcome To The World of Forex Trading…

In order to develop a full understanding of forex trading and why it is even possible, you need to understand a little bit about the history of money. In early human societies, goods were traded for goods. If you had anything that was of value to someone else, then you had currency. While this system worked reasonably well for thousands of years, there were also some obvious drawbacks.

As communities began to grow and trade with each other, they found that it was hard to place a determinate value on each good. It also became apparent that more than one party needed to be involved in some trades to make them profitable and beneficial for each party. The modern system of money, and eventually forex trading, was born out of the answer to this problem.

The ability to equate value with an object that was otherwise useless was the first real step towards developing currency. If you think about it, the $20 piece of paper in your pocket has no inherent value; it’s only valuable because the government says that it is. That was the challenge that these early cultures faced. How to determine what had value, and how much value, was a question that took many generations of development to work out. At the heart of forex trading are the solutions that they developed.

Forex trading involves the exchange of two base currencies. Anyone can do this. The point of trading foreign exchange currency is to make money though, so it must be done with some planning. The ability to predict the world economy and realize that at some point in the future, the value of the foreign currency that you just traded for must go up is what separates good investors from those who go broke.

Forex trading involves a cross. The cross is formed by the two currencies being traded. There are a few currencies that are considered majors. These are the largest players on the world stage and make up the majority of crosses traded. A few examples of majors are the U.S. Dollar, the Euro, and the Yen. Each of these currencies, and the economies that they represent, set the stage for and the value of the rest of the world’s currencies.

Finding a stable standard of value is what makes forex trading profitable. If one nation were to decide suddenly that their currency held no value, then the market would collapse around it. Perhaps this is why the six nations that make up the majors are the most widely traded. Their economies have proven to be stable and the value of their currency is strong. People have agreed that currency is worth something and in fact, worth having. That is the basic operating principle of finance and it is the driving force behind what make foreign exchange trading profitable.

Author: Lorna Goldsborough
Website: http://www.forextradingexplained.co.uk