6 Advantages of Forex on Other Investments

1. Lower Margin

Just like futures and stock speculation, a forex trader has the ability to control a large amount of the currency basically by putting up a small amount of margin. However, the margin requirements that are needed for trading futures are usually around 5% of the full value of the holding, or 50% of the total value of the stocks, the margin requirements for forex is about 1%. For example, margin required to trade foreign exchange is $1000 for every $100,000. What this means is that trading forex, a currency trader's money can play with 5-times as much value of product as a futures trader's, or 50 times more than a stock trader's. When you are trading on margin, this can be a very profitable way to create an investment strategy, but it's important that you take the time to understand the risks that are involved as well. You should make sure that you fully understand how your margin account is going to work. You will want to be sure that you read the margin agreement between you and your clearing firm. You will also want to talk to your account representative if you have any questions.

The positions that you have in your account could be partially or completely liquidated on the chance that the available margin in your account falls below a predetermined amount. You may not actually get a margin call before your positions are liquidated. Because of this, you should monitor your margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.

2. No Commission and No Exchange Fees

When you trade in futures, you have to pay exchange and brokerage fees. Trading forex has the advantage of being commission free. This is far better for you. Currency trading is a worldwide inter-bank market that lets buyers to be matched with sellers in an instant.

Even though you do not have to pay a commission charge to a broker to match the buyer up with the seller, the spread is usually larger than it is when you are trading futures. For example, if you were trading a Japanese Yen/US Dollar pair, forex trade would have about a 3 point spread (worth $30). Trading a JY futures trade would most likely have a spread of 1 point (worth $10) but you would also be charged the broker's commission on top of that. This price could be as low as $10 in-and-out for self-directed online trading, or as high as $50 for full-service trading. It is however, all inclusive pricing though. You are going to have to compare both online forex and your specific futures commission charge to see which commission is the greater one.

3. Limited Risk and Guaranteed Stops

When you are trading futures, your risk can be unlimited. For example, if you thought that the prices for Live Cattle were going to continue their upward trend in December 2003, just before the discovery of Mad Cow Disease found in US cattle. The price for it after that fell dramatically, which moved the limit down several days in a row. You would not have been able to leave your position and this could have wiped out the entire equity in your account as a result. As the price just kept on falling, you would have been obligated to find even more money to make up the deficit in your account.

4. Rollover of Positions

When futures contracts expire, you have to plan ahead if you are going to rollover your trades. Forex positions expire every two days and you need to rollover each trade just so that you can stay in your position.

5. 24-Hour Marketplace

With futures, you are generally limited to trading only during the few hours that each market is open in any one day. If a major news story breaks out when the markets are closed, you will not have a way of getting out of it until the market reopens, which could be many hours away. Forex, on the other hand, is a 24/5 market. The day begins in New York, and follows the sun around the globe through Europe, Asia, Australia and back to the US again. You can trade any time you like Monday-Friday.

6. Free market place

Foreign exchange is perhaps the largest market in the world with an average daily volume of US$1.4 trillion. That is 46 times as large as all the futures markets put together! With the huge number of people trading forex around the globe, it is very hard for even governments to control the price of their own currency.

10 easy tips to help you become a successful Forex trader

10 easy tips to help you become a successful Forex trader

1. Get a reliable broker
This is a very important step to take before you begin trading with real money. First choice you must make is whether to go with an ECN broker who does not interfere with your trades or to go with a non-ECN broker who do have the ability to interfere with your trades. The main advantage of using an ECN is that they will not manipulate your trades. Not all non-ECN brokers do manipulate your trades but they do have the potential to cause slippage, execution problems and to change the spread to suite them. However non-ECN brokers require smaller initial deposits and offer higher leverage. If you are looking to purchase a Forex Robot it should clearly state whether it is broker dependant and advise you on suitable brokers.
2. Do not overtrade
Trading can be a stressful job if you let it be. Overtrading is a cause of this stress. Every day a trader should have a plan that includes entries, exits and the daily profit/loss target. The trader should stick to this plan and avoid the pain overtrading can cause. Using a Forex Robot eliminates this problem.
3. Do not always take the advice of other “traders”
There is lots of information related to trading Forex available online. It is important to be careful what information you decide to believe and follow as there is alto of contradicting advice. It is better to make your own judgements. This is especially the case with Forex Robots as many traders use them incorrectly and then give them unfair bad reviews. Some intentionally give them bad reviews to steer others away from being profitable with them.
4. Have a plan
95% of traders fail because they don’t have a plan. Know when to enter and exit a trade. Know when to quit trading for the day.
5. Trade with what you can afford to lose
Do not trade with money that is needed for rent, for your family, for debts, etc. Trade with what you can afford to lose, but don’t expect to lose it as a negative attitude is not good for a trader.
6. Be Patient
Yes you can become very wealthy by trading the Forex. Not always overnight though. Trading manually can take a long time to master and to see profits but if you stick to it then you could well be very rich. Forex Robots speed up the process as you do not have to spend years learning.
7. Consider setting up a Virtual Private Server (VPS)
This tip is for those who use or want to use a Forex Robot. These are great money makers if chosen correctly. It is a good idea to get the robot setup on a VPS so you don’t have to have your computer switched on when the automated forex software is running.
8. Take a break
Just like any job it is important to take a break and give your mind a rest.
9. Avoid lagging indicators
Many traders spend years and years of their lives wasting time on pointless indicators that look great in the past but are lagging when used in the present.
10. Trade live
Even if it is with a small account and small trade size you need to trade on a live account. If you want to run a Forex Robot then run it on a live account with a small amount of risk. Do not waste hours upon hours of your life trading the charts in the past!