Posted by Admin on Jul 28, 2010 in Articles | 0 comments
For over a century now, Stocks have been heavily traded and known to the average US investor and non-investor alike. In essence, when you buy a stock you are purchasing a stake of ownership in the company. When buying a stock, you are doing so with the belief the value of that company’s stock will go up. There is a lot of information available to the public about company’s who’s stocks are available for purchase, so significant research can be done to determine the merits of these company’s stocks.
Since the Forex market became available to the public in the late 90’s, several advantages to trading currencies over stocks have been observed.
The first and most important advantage is the liquidity. Currently, approximately $3.2trillion flows through the currency market everyday. If you were to take the entire global stock market, along with all the commodities, derivatives, bond markets, etc. and put all the other global markets into one pool, it would still be smaller than the Forex market. Liquidity gives you several advantages when it comes to trading. One: you will likely get faster execution as there will be more of a market available at most prices quoted. Two: it is virtually impossible to corner or seriously manipulate the FX market or any particular currency you are trading. Three: when you are trading stocks, anyone who wants to buy a stock wants it to go up in value, whereas in FX, people may purchase a currency with no intention of profit. Some examples are multi-national corporations who have to exchange funds for business purposes, or central banks working to stabilize their economy. The bottom line is when it comes to participants, in the stock market, there has to be one winner and one loser, whereas this is not always the case in currencies.
The second critical advantage to trading currencies over stocks is that you can trade FX 24 hours a day 6 days a week from Sunday 5pm EST to Friday 4pm EST. This provides significantly more trading opportunities and also reduces the chance of overnight gaps which happen often while trading stocks due to information coming out which can affect that particular stock when you cannot trade it.
A third advantage is the leverage; prime stock accounts get maybe 2:1 leverage, with currencies you can get up to 400:1 which gives you more purchasing power.
A fourth advantage; with stocks your accounts can and often do go below their original value with you actually owing money to your broker. In contrast most FX trading companies have automatic algorithms built into their platforms to close out all positions if the equity value hits a zero balance, yielding more equity protection.
A fifth advantage; back to liquidity, which tends to make market prices smoother since there is more money to make the market, giving technical analysis much more potency.
A sixth advantage; it is much easier to manipulate a stock price since all orders flow through one central exchange whereby the ’specialists’ have many advantages that are unavailable to the average investor. Another challenge is that companies can easily manipulate their accounting or perform illegal activities which can falsely effect their perceived value. In contrast there are too many protocols in the FX market to do this.
A seventh advantage; companies can receive bad press and even fail and stock prices can drop extremely fast, much faster from a percentage perspective in comparison to currencies. If the company fails, your stock is worthless while with currencies, the chance of a G-8 country’s dollar or base currency becoming worthless is extremely unlikely. As we have seen in the recent market volatility and global credit crisis, companies that appeared to be stable (Bear Stearns, Lehman Brothers, Wachovia, etc.) have all failed. Countries within the G-8 are much more stable unions than individual companies.
While most of the money trading stocks is made by buying the stocks, currencies are traded both up and down and there is never an entire bear or bull market. This is because as one currency goes up, another must go down but they cannot all do this together.
This informational comparison should give the potential investor a clearer picture about the unique differences between the stock market and the currency market and the clear advantages the currency market holds.
Steve Patzkowski
CEO
White Knight Investments
http://WhiteKnightFXI.com
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Posted by Admin on Aug 13, 2008 in Articles | 0 comments
Paul Bryan asked: Foreign currency trading or FX currency trading is the new age buzzword for the smart investors. In the global market of foreign currencies, prices fluctuate against one another and change value over time. This creates the opportunity for investment by trading one currency against the other. The dramatic evolution of communication technologies in recent years made it possible for millions of small individual investors to trade forex which was not open to them earlier.
According to a recent study, currencies worth more than $1 trillion are traded daily in the global forex market. Global political and economic events influence forex currency trading. The rates of currencies are determined by the investors’ attitude influencing the market. So if you were capable of foreseeing these developments, you can make profits in FX currency trading. On the other hand, if your assumptions are not correct, you may suffer huge losses. So the key to successful forex currency trading is knowledge.
Forex trading involves currency transactions between banks, investment funds, forex brokers and traders. The demand and supply of a particular currency and investors’ expectations determine the market price of that currency. There is no physical location of the market and it is a virtual market.
Four “currency pairs” dominate the global forex currency trading market. These are Euro versus U.S. Dollar, US Dollar versus Japanese Yen, US Dollar versus Swiss Franc, and US Dollar versus British Pound. So for any investor, it will be wise to hold a currency that appreciates in value in relation to the other currencies. For example, you may buy 50 British Pounds for US$100 and hold the Pounds for a while. When the value of Pounds increases in relation to US Dollars, you may sell those Pounds to earn $120.
Analyzing forex currency trading market is also equally important. There are two types of analysis: “fundamental” and “technical”. Fundamental analysis takes into account the economic conditions, political events, situation of emergency, etc. to derive the trend. Technical analysis, on the other hand predicts the future trend on the basis of past prices and trends. Fundamental analysis explains the reasons behind price movements and attempts to predict changes in price and market trends. Traders and investors adopt a hybrid method of analysis based on both technical and fundamental analysis for their Fx currency trading.
Forex currency trading is sometimes described as one of the riskiest financial markets. However, by choosing the reasonable leverage size, traders can minimize their risks. The Forex market is a highly speculative in nature and the ability to analyze price behavior becomes an invaluable asset for any trader or investor.
Since every country is involved in forex currency trading, the market is open round the clock. Irrespective of geographical location, any investor can open an account and buy and sell in any quantity of forex currencies from anywhere in the world. The FX currency trading offers fantastic opportunity for wealth provided you know the basic rules and regulations of the market. Therefore, before starting FX currency trading, do your homework and read as much as to maximize your knowledge hence profits.
virtual currency
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Posted by Admin on Jul 9, 2008 in Articles | 0 comments
Paul Bryan asked: Foreign currency trading or FX currency trading is the new age buzzword for the smart investors. In the global market of foreign currencies, prices fluctuate against one another and change value over time. This creates the opportunity for investment by trading one currency against the other. The dramatic evolution of communication technologies in recent years made it possible for millions of small individual investors to trade forex which was not open to them earlier.
According to a recent study, currencies worth more than $1 trillion are traded daily in the global forex market. Global political and economic events influence forex currency trading. The rates of currencies are determined by the investors’ attitude influencing the market. So if you were capable of foreseeing these developments, you can make profits in FX currency trading. On the other hand, if your assumptions are not correct, you may suffer huge losses. So the key to successful forex currency trading is knowledge.
Forex trading involves currency transactions between banks, investment funds, forex brokers and traders. The demand and supply of a particular currency and investors’ expectations determine the market price of that currency. There is no physical location of the market and it is a virtual market.
Four “currency pairs” dominate the global forex currency trading market. These are Euro versus U.S. Dollar, US Dollar versus Japanese Yen, US Dollar versus Swiss Franc, and US Dollar versus British Pound. So for any investor, it will be wise to hold a currency that appreciates in value in relation to the other currencies. For example, you may buy 50 British Pounds for US$100 and hold the Pounds for a while. When the value of Pounds increases in relation to US Dollars, you may sell those Pounds to earn $120.
Analyzing forex currency trading market is also equally important. There are two types of analysis: “fundamental” and “technical”. Fundamental analysis takes into account the economic conditions, political events, situation of emergency, etc. to derive the trend. Technical analysis, on the other hand predicts the future trend on the basis of past prices and trends. Fundamental analysis explains the reasons behind price movements and attempts to predict changes in price and market trends. Traders and investors adopt a hybrid method of analysis based on both technical and fundamental analysis for their Fx currency trading.
Forex currency trading is sometimes described as one of the riskiest financial markets. However, by choosing the reasonable leverage size, traders can minimize their risks. The Forex market is a highly speculative in nature and the ability to analyze price behavior becomes an invaluable asset for any trader or investor.
Since every country is involved in forex currency trading, the market is open round the clock. Irrespective of geographical location, any investor can open an account and buy and sell in any quantity of forex currencies from anywhere in the world. The FX currency trading offers fantastic opportunity for wealth provided you know the basic rules and regulations of the market. Therefore, before starting FX currency trading, do your homework and read as much as to maximize your knowledge hence profits.
Virtual Adviser
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