Currency Trading Online - Balance The Advantages And Disadvantages
Available online currencies: The list of online currencies available for trade on the foreign currency market is almost endless depending on the program, software or interface you use. The most commonly traded currencies in the world are US Dollar/Yen, Euro/UD Dollar, GBP/US Dollar, US Dollar/ Can Dollar, US Dollar/ Franc and Australian Dollar/ US Dollar.
Rate Formula: Most programmes, software and interfaces come with trade rate calculators. Remember to check that the calculators take real-time values in consideration. However should you want to calculate the rates on your own the following formula is used Y-to-X exchange rate =1/ X-to-Y exchange rate.
Pro's to online: The biggest advantage to online trading is that the market is open for business twenty-four hours a day, seven days a week. The favourability of the markets' liquidity is even more attractive if accessible by a mere click of a mouse. Order limits and strategies to curb loss can be setup on the system. Gearing or leveraging allows for great profit opportunities while still keeping risk minimal. Bear markets can also be used turned into bull markets by use of short and long positions depending on pair values.
Con's to online: Understanding and a proper knowledge of foreign currency markets is key to trade success. Have a strategy or set plan and stick to it. If you have tendency to be an impulsive buyer or seller it's recommended that you rather leave this market type alone. Volatility that comes with liquidity is a huge disadvantage as significant moves happen daily, making prices very sensitive. Be prepared to possibly loose any profit as well as initial cash contributions. The possible risk and rewards must be well balanced. Just as leverage can work to your advantage it can also work against you with margin calls occurring when risk to high for the account size.
Risk is real: Risks are just as real as rewards when it comes to forex trade. The trades are conducted spot, over-the-counter. Counter-parties are dealt with directly with no middleman or third party to provide some security. Clearing houses are not used at all, making the risk greater by furnishing no guarantees. Due to the fact that forex markets where establish for speculation mainly, traders have a tendency to be reckless and impulsive. It should be kept in mind that you are at risk of possible losing your total cash balance should even a very small market move occur. - 23196
Rate Formula: Most programmes, software and interfaces come with trade rate calculators. Remember to check that the calculators take real-time values in consideration. However should you want to calculate the rates on your own the following formula is used Y-to-X exchange rate =1/ X-to-Y exchange rate.
Pro's to online: The biggest advantage to online trading is that the market is open for business twenty-four hours a day, seven days a week. The favourability of the markets' liquidity is even more attractive if accessible by a mere click of a mouse. Order limits and strategies to curb loss can be setup on the system. Gearing or leveraging allows for great profit opportunities while still keeping risk minimal. Bear markets can also be used turned into bull markets by use of short and long positions depending on pair values.
Con's to online: Understanding and a proper knowledge of foreign currency markets is key to trade success. Have a strategy or set plan and stick to it. If you have tendency to be an impulsive buyer or seller it's recommended that you rather leave this market type alone. Volatility that comes with liquidity is a huge disadvantage as significant moves happen daily, making prices very sensitive. Be prepared to possibly loose any profit as well as initial cash contributions. The possible risk and rewards must be well balanced. Just as leverage can work to your advantage it can also work against you with margin calls occurring when risk to high for the account size.
Risk is real: Risks are just as real as rewards when it comes to forex trade. The trades are conducted spot, over-the-counter. Counter-parties are dealt with directly with no middleman or third party to provide some security. Clearing houses are not used at all, making the risk greater by furnishing no guarantees. Due to the fact that forex markets where establish for speculation mainly, traders have a tendency to be reckless and impulsive. It should be kept in mind that you are at risk of possible losing your total cash balance should even a very small market move occur. - 23196
About the Author:
Be sure you check out John Eather's excellent free ecourse and reports about Online Forex Trading. Get the latest information on the most up-to-date trading robots and trading systems available on the market today. Go to MoneyMakingFxTrader.com for more details.
posted by X - Men @ 6:54 AM
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