Switching to Forex?

 EXPAND YOUR TRADING REPERTOIRE

Experienced Traders are flocking to the Forex Market in droves, and for good reason. As Cornelius Luca, Professor at NYU expresses it,

 ”Few financial industries generate as much excitement and profit as currency exchange. Traders around the world enter trades for weeks, days or split seconds, generating explosive moves or steady flows, and money changes hands quickly at a staggering daily average of a trillion US dollars. Forex profitability is legendary. George Soros of Quantum Fund realized a profit in excess of 1 billion dollars for a couple of days work in September 1992. Hans Hufschmid of Soloman Brothers, Inc. netted $28 million for 1993. Even by Wall Street standards, these numbers are heartstoppers”.

 If you are currently trading other financial markets and want to consider changing to the forex maket with its numerous advantages for profitable trading,  Please call 520 877-3831 for more information on training for this exciting trading market.

The following article appeared in TRADERSWORLD MAGAZINE discussing the benefits of trading the forex market that make it distinctly more advantageous than other markets.

Why Foreign Currency is Today’s Largest Volume Trading Market
Or, Why Traders Love Trading The Forex Market     
- by Rick Smith, Professional Trader

“In recent years, the foreign currency markets have experienced blockbuster growth, driven by flocks of traders attracted by the markets’ inherent profitability and limited capital risk…”                                                 
                            Cornelius Lucas, Forex Expert Author,       
                            Professor New York University

What is it about the Forex Market that has new Traders flocking and keeps a veteran Trader like me engaged?  I’ve enjoyed Forex Trading since its emergence as an online trading market in the mid 1990’s and despite its growing high profile still not a week goes by without someone asking me, “Why Forex?”  The answer lies in a number of advantages that all play out together.

LIQUIDITY

Forex is highly liquid due to the huge daily volume in the major currency pairs. This liquidity attracts traders because it affords the freedom to open or close a position at will, allowing invested funds to be highly accessible. Liquidity frees traders from the worry of being stuck in a position due to a lack of market interest and movement. The G7 currencies (USD, JPY, EUR, CHF, GBP, CAD, AUD) are considered to be the most liquid.

In this very active (more than US $1.5 trillion dollar per day) market, central banks, large international banks and other major players are continuously providing the market with both bid and ask prices. Due to this high market liquidity most trades are executed nearly instantly at a single market price. This avoids the ’slippage’ problem of some exchange-traded instruments where only limited quantities can be traded at one time at a given price. Note: this does not mean price slippage during major news events does not occur, but it does mean that with that exception slippage is far less of a problem than with many other markets.

LEVERAGE

Forex Traders are able to trade foreign currencies on a highly leveraged basis – up to 100 times and more their investment/trading funds (leverage varies with clearinghouses). As an example, leveraged 100 times an investment of USD $10,000 would permit a self-Trader to trade up to USD $1,000,000 worth of any particular currency. This leverage, unheard of in most markets, creates big opportunity for both profit and loss.

24 HOUR MARKET

A substantial attraction for Traders to the Forex Market is that it has no time or time zone constraints, it is open 24 hours per day throughout the week (closing worldwide Friday afternoon and reopening Sunday afternoon New York time). If the European Market is closed on one side of the world the Asian Market will be open on the other and so all world currencies can be continually traded. This is why Forex is called “the Market that never sleeps”.

Even when one country is experiencing a national holiday with closed financial markets other countries are not, and so the Forex Market remains active. This is a great potential advantage because Forex Traders can react to news when it breaks, rather than waiting with the crowd for the opening bell, as is the case with most markets. This enables Traders to take positions anticipating the impact on the exchange rate of an important announcement, world event, or piece of news information. Adding to this advantage of 24 hour trading, high liquidity allows Spot Forex Market Traders to exit or open a new position regardless of the hour.

INFORMATION FLOW

The Foreign Currency Exchange is a market where there is little or no ‘inside information’. Because the Foreign Exchange has to do with world economy and the economies of countries, all pertinent market-moving news is released publicly so everyone in the world can receive the same news at the same time. This is in contrast to the Stock Market where it is a relatively common experience of Stock Market Traders to have a certain stock suddenly lose value without having any idea what caused such a quick down-spike.

Later the news will report that a key executive at a particular company has resigned; or that the company’s accounting practices have been called into question; or that some other influential piece of information was released that the Stock Market Trader was not privy to quickly enough. Instantaneous access (online through the trading platform in many cases) to Forex market-making news does more than level the playing field, it provides the Forex Trader with the incalculable trading advantage of ‘being in the right place at the right time’.

NEVER A DOWN DAY

Another advantage of the Forex Market is that there is never a down trading day because there is no ‘bear’ market, per se. Currencies are traded in pairs, for example US Dollar vs. Yen or US Dollar vs. Euro. Every position involves the selling of one currency and the buying of another. If the trained Trader (with the aid of proper charts, fundamental analysis, pattern recognition, etc.) believes that the Euro will appreciate against the Dollar, he/she can sell Dollars and buy Euro. Or if the Trader determines that the opposite trade would be more profitable, he/she can buy Dollars for Euros.

The potential for profit exists either way as long as there is any up/down movement of the exchange rate between the two currencies being traded. In other words, one side of the pair is always gaining, and provided that the trader picks the right side, a potential for profit ALWAYS exists. As important as those all are, to me they are still just the intellectual responses to the question, “Why Forex?”, which can only allude to the professional and personal satisfaction of making money by trading a system that works in an exciting market that pulses with the lifeblood of global affairs – currencies.