The Benefits of Forex Trading

No Short Selling Restrictions

Forex trading always involves buying one currency and selling another, so traders can easily trade in a rising or falling market. There is no Zero Uptick rule or any other restriction against shorting a currency.

At $4 Trillion Per Day, Forex is the Most Traded Market in the World

The sheer volume of Forex helps to facilitates price stability in most market conditions. What's more, almost 85% of all currency transactions involve the 7 major currency pairs.

Trade on Your Schedule; Respond to Changes in the Market

Forex is a true 24-hour market, open continuously from 5:00pm ET on Sunday to 5:00 pm on Friday. With three distinct trading sessions in the US, Europe and Asia, you can trade on your own schedule and respond to breaking news.

Keep 100% of Your Trading Profits

Most Forex brokers charges no commissions or transaction fees, while still offering free access to real-time quotes, news, charts, research, and more. The cost of trading is built into the bid/ask spread. Also, dealing spreads as low as 3 pips (.0003) are available in currency trading. Even at a penny ($.01), the bid/ask on a stock trade is 30x wider, in addition to the brokerage commission.

Up to 200:1 Leverage

With more buying power, you can increase your total return on investment with less cash outlay. Of course, increasing leverage increases risk. With $1,000 cash in a margin account that allows 200:1 leverage (.5%), you can trade up to $200,000 in notional value.

What Tools Do I Need to Start Trading Forex?

A computer with a high-speed Internet connection and knowledge of the basics of Forex trading and account with a licensed and regulated Forex broker; are all that is needed to begin trading currencies.

What Does It Cost to Trade Forex?

An online currency trading “mini account” may be opened for as little as $300.  A mini account is a good way to get you started in this arena.

A “standard account” may be opened with $1000. We suggest higher amounts for both for the benefits of increased leverage. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.

What is a Pip?

The most common increment of currencies is the Pip. If the EUR/USD moves from 1.2250 to 1.2251, that is ONE PIP. A pip is the last decimal place of a quotation. The Pip is how you measure your profit or loss.

For easier understanding, in a mini account a PIP is worth $1 and in a standard account it is worth $10.

What is a Lot?

Spot Forex is traded in lots. The standard size for a lot is $100,000. There is also a mini lot size and that is $10,000. As you already know, currencies are measured in PIPS, which is the smallest increment of that currency. To take advantage of these tiny increments, you need to trade large amounts of a particular currency in order to see any significant profit or loss.

How to choose a broker?

In the United States a broker should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and a NFA member. The CFTC and NFA were made to protect the public against fraud, manipulation, and abusive trade practices.

You can verify Commodity Futures Trading Commission (CFTC) registration and NFA membership status of a particular broker and check their disciplinary history by phoning NFA at (800) 621-3570 or by checking the broker/firm information section (BASIC) of NFA's Web site at www.nfa.futures.org/basicnet/.

What is an “accredited Investor?”

This a term utilized by the Securities and Exchange Commission (SEC) under regulation D to refer to investors that are financially savvy and have less of a need for protection provided by certain government filings. These investors are also referred to as qualified purchaser.

What are the qualifications of an accredited investor?

To qualify for this status an individual must have acquired at least one of the following criteria:

• Earn individual income in excess of $200,000 annually or, jointly of over $300,000 for the current past two years and uphold the future expectation to reasonably maintain the same level of income.
• Have acquired an individual or jointly net worth exceeding $1,000,000.
• Must be either a general partner, director, executive officer or a related combination for the issuer of a security being presented.

What is an actual return?

An actual return is the gain or loss of an investor. An actual return is the amount of capital that an investor receives from their investments.

What does the “ASK” price mean?

The Ask is the price that a seller is willing to accept for a security. Accompanying the price, theAsk quote usually stipulates the level of security that’s willing to be sold at that price. This is sometimes referred to as THE ASK.

What is Auto Trading?

Auto trading is an execution strategy where buy and sell orders are automatically engaged on a programmed system. The buy and sell orders are dispatched to be executed in the market when a certain criteria has been realized.

What is a BID price?

The BID is the price a speculator is willing to pay for a security. This is a portion of theBID with the other being the bid size; which exhibits the number of shares aninvestor is willing to purchase at the BID price. The opposite of the BID would be the ASK; this is the price a seller is seeking for their shares.

What is a BREAKOUT?

When a price movement advances through a designated level of support or resistance normally accompanied by increased volatility and heavy volume, this is referred to as a BREAKOUT.

What is a bull market?

The usage of the terms “Bull” and “Bear” markets metaphorically references the market based upon the methods used by each animal to attack their prey. Usually a bull thrusts its horns into the air while the bear swipes it paws downward. Hence when the market trends upwards, it is considered a Bull market. When the market trends downward, it is said to be a Bear market.

Who is a Broker?

A broker is an individual or a firm that charges an investor a fee for executing buyand sell orders.