FOREX Trading
• What Is
FOREX?
• FOREX
Or Futures?
• FOREX
Or Stocks?
•
FOREX Trading for
Beginners
• FOREX
Terms To Know
•
Preparing for FOREX
Trading
• Is
FOREX Trading Risky?
•
The Philosophy of FOREX
Trading
•
FOREX and Fundamental
Analysis
•
Tools for FOREX Trading
•
Trading Strategies for
FOREX
• Trading Systems
for FOREX
•
Reading and Understanding
FOREX Quotes
•
FOREX Profits and Losses
•
FOREX Technical Analysis
Part 1
•
FOREX Technical Analysis
Part 2
•
FOREX Trading Brokers
• The
FOREX Margin
•
What Are Currency Options?
•
What Are FOREX Signals?
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Online FOREX Trading
FOREX or Stocks?
When you think of FOREX, it is important not to confuse FOREX trading with
'playing the stock market.' They are two very different things, and it is
important to understand the difference. Let's take a look at stocks and FOREX.
Stocks
Stocks are traded on a stock market, such as the New York Stock Exchanges
(NYSE) and the National Association of Securities Dealers Automated Quotation
System (NASDAQ), and this has been so for as long as stock markets have existed.
When you purchase stock, you are essentially purchasing a share, or shares,
in the company that is selling the stock. Companies sell stock in order to
raise money to grow the business. When you buy stock, you are investing in
the business.
If the company that you've invested in does well, the value of your stock
rises. If it doesn't do well, the value drops, meaning that it will no longer
be worth as much as you bought it for. Obviously, the entire successful notion
of buying and selling stocks is to buy low, and to sell when the price is
high. In many cases, this is the only way that you see a return on your
investment, but many companies pay out dividends to their shareholders as
well, where a percentage of the overall profit is paid out to investors,
based on how much stock in the company the investor owns.
Stocks are traded through stock brokers. Stock brokers earn a commission
on the stocks that they trade, which is paid by the investor. Stocks may
be listed with one stock exchanges, or on several stock exchanges. Stocks
can be either long term or short term investments, but ideally, they are
long term investments. If you deal in stocks, you should have a diversified
portfolio, covering several different industries, and including several 'blue
chip' stocks, which have proven to remain steady over numerous years.
Short term stock trading is very risky. You may know the short term stock
traders as 'Day Traders.' Day traders are short term stock traders who try
to profit from the daily fluctuations in the stock market. They often buy
and sell several different times during the day - buying low, and selling
high.
Like FOREX, some stocks can be bought on margin. This means that the trader
borrowed the money to buy the stock. Margin rates typically run around 50%,
meaning that the investor can borrow about half of the value of the stock.
FOREX
FOREX is the Foreign Exchange Market. While stocks may be bought for long
or short term, FOREX is always short term trading, with investors buying
and selling a currency within a 24 hour period. While FOREX trades are made
through brokers, they are essentially commission free, and the fees are based
on a spread, which is the difference between the asking price of the currency
and the selling price of the currency.
FOREX is not a stock market, it is a financial market. In fact, it is the
largest financial market in the entire world. While the Stock exchanges in
the United States have transactions in the neighborhood of $100 billion per
day, the FOREX market has transactions in excess of $1.5 trillion dollars
per day. While stock exchanges are located in specific places, such as New
York, there is no specific place for the FOREX. There are trading markets
located around the world.
Another advantage of the FOREX is that it is open twenty four hours per day,
five days a week, whereas the stock markets are only open seven hours, five
days a week. This makes FOREX traders very happy, because they can buy and
sell currencies whenever they feel that the time to buy or sell is right,
instead of having to wait for the market to open.
The FOREX is also a great deal more predictable than stocks, and it doesn't
take a great deal of money to get started with FOREX trading. For instance,
you can open a mini account for as little as $250!
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