Why Should You Trade The Forex Markets?
It is quite possible to make regular profits trading the Forex market.Internet trading using spread betting is increasing in popularity
. providing you learn the rules of spread betting and you decide to stick rigidly to those rules, then profits are quite easy to achieve.
There are of course many different markets, and all offer excellent opportunities to make money. What are they?
The stock markets are probably the most well known and the most popular.Investors buy and sell shares in company stocks and hope that the shares will increase in value. With spread betting you do not actually buy any shares, and the beauty of spresd betting is that you can make profits on both a rising price and a falling price.We all know of this market because of regular news bulletins reporting on the rise or fall of the stock market that day.
The foreign currency market (Forex) is probably the second most popular market. This is where traders deal in foreign currencies, rather like when we exchange holiday money from one currency for another.
The bond market is where governments issue treasury bonds to put liquidity into the markets.This is the financial treasury market based on government debt.
We have all heard of the commodity market, this is where essentials such as coffee,pork bellies,soya beans and oil etc.are traded. there are many opportunities in all of these markets to make very good profits.
However, the one market that offers the most volatility and liquidity is the forex market.
To make regular and sustained profits from your trading there must be constant price movements. In the Forex market, because of it's liquidity, prices are moving up and down continually.
One of the most attractive reasons to trade the Forex markets is that profits can be made both on rising prices(long) and on falling prices (short).
Some reasons why Forex trading is a good idea.
Profits can be made on long or short prices.
Massive trading volumes means that prices are constantly moving.
It is possible to trade 24 hours a day (except weekends).
Exchange rates are regularly affected by economic or political news.
The fastest growing market is the Forex market, ideal for the small investor. To take advantage of this market we use a trading strategy called spread betting. There are many excellent spread betting companies, you will need to set up a spread betting account with the one of your choice. These companies have software dealing packages which are very easy to understand, and with access to an internet connection, it is possible to trade from anywhere in the world.
Forex trading is very simple, basically, you are trading on a repeatable pattern. Simple, but with strict rules. You can unboubtedly make profits, but the rules must be learnt and strictly enforced.
A very brief outline of the rules are.
Trade at specific times.
Never over trade, this is greed, which always leads to unnecessary risks and therefore, inevitable losses.
When all the correct signals are in place, then, and only then is it time to enter the market.
Always calculate your possible risk.
Always calculate your potential loss, never exceeding 2% of your trading fund.
Always place a stop loss.
Don't be too greedy, decide what profit margin you will be happy with.
Never break the rules.
I repeat, never break the rules, and it is possible to make a lot of money with Forex trading. It is very painful to make losses, and you will make losses from time to time, everyone does, but if you stick to the rules, your losses will always be an absolute minimum.
Of course you will have losing trades from time to time, it is impossible not to, all traders do.
But providing you respect the rules and obey your money management and stop loss guidelines, you will protect both your capital and your sanity, and find that Forex trading is both great fun and very rewarding.
by: Raymond Carr
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