Reasons Why You Should Be Trading Forex
You Should Be Trading Forex by FxPremiere
Reasons Why You Should Be Trading Forex Signals –
1. Non-Correlated Price Movement: For the most part, currency prices are uncorrelated to the stock Market. This means that if you are a stock trader who is long the stock market, you can benefit from fluctuating currency prices that are completely uncorrelated.
2. Fewer Rules: Unlike the trading of stocks, futures or options, currency trading does not take place on an exchange with rules like the NYSE or CME. In fact, if you had exclusive information, and it was used to make a lot of money, legal issues would not arise, like they would in the stock market. In other words there are no insider trading rules in the Forex. Reasons Why You Should Be Trading Forex.
3.No to low commissions: For the most part there are no exchange, brokerage or clearing fees in the Forex Market. Instead, brokers make money on the difference in price
you pay to buy, or the amount you receive when you sell, currencies, also known as the spread.
4. 24 Hour-Market: The Forex market is a 24 hour market which means that you can trade when best suits you. If you are a night owl you can trade at 3 AM if you want to.
5. Less Market Manipulation: Because the Forex market is so large there is less market manipulation, with the only real manipulation coming from the Central Banks. This kind of
manipulation is actually good because it creates large trends in the market.
6. Buy and Sell With Ease: Unlike the stock market there is no uptick rule in Forex. This means that you can sell just as easily as you can buy. In other words you can make just as much if not more money by shorting a currency as you can by buying it.
7. Tax Benefits: When you trade Forex, 60% of your gains are taxed as capital gains and the remaining 40% is taxed at your regular income tax rate. I am not a tax specialist so make sure to consult your tax preparer to confirm that this will work for your situation. Reasons Why You Should Be Trading Forex.
8. Historically A Trending Market: There has been no shortage of trends in the Global Currency Market since the end of the Nixon era gold standard. Trends are where the money is made and the Forex market usually has at least 2-3 big trends every year.
9. Technical Traders Dream: Technical analysis tends to work very well for currency trading. This allows short-term traders to pull quick and precise profits from the market and long-term trend followers to profit along the way of the big trends on Reasons Why You Should Be Trading Forex .
10. Low Barrier of Entry: Unlike other markets such as the stock and futures market, the Forex market doesn’t require much capital to start with. There are some brokers that will allow you to trade with as little as $250. The beauty is that you can add to your account regularly and use the power of compounding to grow your wealth over time.
How Do I Make Money & What Are The Risks?
Understanding how to make money by trading Forex is pretty simple. In Forex, unlike stocks or futures, you are trading two countries rather than one stock or one instrument.
Essentially you are betting that the value of one countries currency will go up or down relative to the value of another countries currency. Since currencies are traded in pairs, when you buy one currency you are simultaneously selling the other currency. Let’s take a look at an example of how you can make money from a Forex transaction:Reasons Why You Should Be Trading Forex .
Forex Trading for Beginners
Let’s suppose that you have $900 U.S. dollars and you exchange that for $1,000 Australian dollars. One week later, the AUD/USD exchange rate goes up from 0.90 to 1.0/ In this example, the Australian dollar has increased in value to the U.S. dollar.
Daily Trading Signals
You could then exchange back the $1,000 AUD back to U.S. dollars and you would have received a $100 profit. Essentially, you started with $900 and you now have $1,000. If the AUD had decreased in value to the USD you would have lost money on the transaction instead of making a profit. You can also look at the process of buying currencies as buying shares in a country in that you are betting on the success or failure of a particular country’s economy. Forex trading, like any form of trading, is not without risk. Some may even suggest that trading in the Forex market actually carries above-average risk by FxPremiere.
There are two reasons for this:
1. No Central Exchange – While having no central exchange can be a benefit there is also a risk involved. The main risk from this comes from less regulation which means that some brokers are unscrupulous. That is why choosing the right broker is so important. I’ll show you how to make sure you choose the right broker below.
2. Leverage – Leverage (margin trading) can be a double-edged sword. When the new trader starts trading with leverage there will often notice right away that the dollars in their account generally stretch a lot farther. This can lead to two things: a. Taking too much risk on a position and/or b. Overtrading. These are both things that can really decimate your account. Trading with margin is no different than trading without it as long as you respect it and use it wisely. I’ll teach you how to do this using proper money management techniques.
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Tools You Will Use
1. The Williams % R – Williams % R or just %R, is a technical analysis oscillator showing the current closing price in relation to the high and low of the past N days (for a given N). Its purpose is to tell whether a commodity or currency market is trading near the high or the low, or somewhere in between, of its recent trading range. We will use this in combination with a simple trend finding technique to determine the best possible entry during a correction in the trend. Reasons Why You Should Be Trading Forex.
2. The 50 Exponential Moving Average – EMA is a type of infinite impulse response filter that applies weighting factors, which decrease exponentially. The weighting for each older datum decreases exponentially, never reaching zero. This helps us to measure trend by taking all previous data into account.
3. The 5 Simple Moving Average – The Simple Moving Average is the unweighted mean of the previous N data. We will use this as a way to exit the market and trail our stop loss to protect profits.
4. These indicators can be found in most charting software programs. – Our preferred software for trading currencies is Meta Trader 4, which is free or Ninja Trader, which
Has a small monthly cost for the data feed but gives you a larger range of instruments to trade.
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