By Matthew Vint
One of the main advantages of trading in the Forex market is that trading is very easy and convenient. You can setup an online currency trading account within a few minutes nowadays, with only a few dollars. You do not have to literally exchange your money in cash form or setup some special kind of Forex bank account - you can simply start trading currencies online from your own home. But you can't do this all yourself - you will need to find an online Forex trading website.
These online Forex trading websites are often referred to as "brokers", though they aren't technically brokers at all since they don't work with commissions - there aren't any commissions when trading in the FX market online. You are dealing directly with the market maker, when trading foreign exchange currencies. You might wonder why they would even bother providing such a service if they don't make any money out of you and your trades - well actually, they do, but not nearly as much as stock brokers do. Market makers in Forex simply charge spreads (the spread is the difference between the buy and sell quote - stock brokers though, will charge commissions.
When trading stocks inside your stock brokerage account, not only do you incur a spread cost from the market maker, but also both a buy commission and a sell commission from your stock broker. So, once you have bought and sold a stock, you have already paid for three separate fees. In foreign exchange trading, you only have to simply pay for the single fee of the spread, and no annoying commission fees which could cut into your marginal profits/losses.
It gets even better too: You might also want to know, that even the spread cost is lower in Forex trading than in stocks. This is because, when you consider the sheer volume and amount of currency you are actually controlling, the spread cost will come out appearing a lot less significant.
So, this is just another advantage of trading foreign exchange currencies online - you pay a lot less in the Forex market than you do in other financial markets, which is just another reason why it is so popular. You will not have to worry about any hefty commission fees and you can take your entire profit or loss to yourself - you are your own trader!
In conclusion, Forex trading in the currency market is a lot more simple than trading in other financial markets since you only need an online FX broker (though notably these brokers will also be referred to as "brokers") and you can trade from home within a matter of minutes. Forex brokers do not work with commissions, only spreads, making currency trading a lot cheaper than trading in other financial markets, such as in stocks. You are more responsible for yourself when trading Forex and you are your own trader, which if you think about it, is more of a positive attribute to FX trading than a negative one.
These online Forex trading websites are often referred to as "brokers", though they aren't technically brokers at all since they don't work with commissions - there aren't any commissions when trading in the FX market online. You are dealing directly with the market maker, when trading foreign exchange currencies. You might wonder why they would even bother providing such a service if they don't make any money out of you and your trades - well actually, they do, but not nearly as much as stock brokers do. Market makers in Forex simply charge spreads (the spread is the difference between the buy and sell quote - stock brokers though, will charge commissions.
When trading stocks inside your stock brokerage account, not only do you incur a spread cost from the market maker, but also both a buy commission and a sell commission from your stock broker. So, once you have bought and sold a stock, you have already paid for three separate fees. In foreign exchange trading, you only have to simply pay for the single fee of the spread, and no annoying commission fees which could cut into your marginal profits/losses.
It gets even better too: You might also want to know, that even the spread cost is lower in Forex trading than in stocks. This is because, when you consider the sheer volume and amount of currency you are actually controlling, the spread cost will come out appearing a lot less significant.
So, this is just another advantage of trading foreign exchange currencies online - you pay a lot less in the Forex market than you do in other financial markets, which is just another reason why it is so popular. You will not have to worry about any hefty commission fees and you can take your entire profit or loss to yourself - you are your own trader!
In conclusion, Forex trading in the currency market is a lot more simple than trading in other financial markets since you only need an online FX broker (though notably these brokers will also be referred to as "brokers") and you can trade from home within a matter of minutes. Forex brokers do not work with commissions, only spreads, making currency trading a lot cheaper than trading in other financial markets, such as in stocks. You are more responsible for yourself when trading Forex and you are your own trader, which if you think about it, is more of a positive attribute to FX trading than a negative one.
How Forex Trading Works is a resourceful website that serves to deliver free, online content relating to Forex trading, to anyone and everyone.
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