Forex Trading Method

The forex market is the largest and most volatile market, even much larger than the stock market. It is also the most popular across the countries, making forex trading the greatest venture for the majority of people. This is mainly because of two reasons: it is relatively less complex than the stock market and it is a lot less risky. Daily currency movements are small, usually less than a percentage and hardly ever reaching 1%. If you are trading small, this small movement means you can trade in confidence without fear of grand losses.

However, if you are keen to make high profits, you can take advantage of leverage. In forex trading, leverage can be as high as 200:1. A lot of brokerage companies give a ratio of 100:1, that is, for every $1 you have, your broker lends you $100. With this, you can trade currency worth hundreds of dollars, with only a few thousand dollars in your account. It is this huge control the method gives traders and the fact that transactions are made easily and fast that makes it so popular. There are no restrictions to when you can trade either, so you can do it day and night.

Because of this high leverage, the chances of making big profits are higher. Similarly, the losses can be equally great. Forex traders, especially those investing a large amount of capital, must use risk management tools to minimize loss.

No other trading method offers such low margins as forex trading. All a trader is required to have is 1% of the currency value and they can start buying and selling. With the sock market for example, traders must have at least half the value of the total investment before they can buy. In addition, stock market commissions are much higher than those charged in forex trading. Actually, the only fee a forex trader pays is the spread, which also acts as the broker’s fee, payable during each trade. Stock traders on the other hand, pay both spread and commissions.

Another factor that makes forex trading a preferred method of trading for many is the fact that you get to short-sell. There are no lulls as happens with equity and stock markets. With forex, you are buying and selling simultaneously. In other markets, once a market begins a decline, you cannot simply opt out by short-selling, even when the risk of loss is staring you in the face. Also with the stock market, you can only buy short during an uptick. This is not required in forex trading; you simply get in when you want because of the high liquid state of the market.

Forex trading is open to all categories of investors, both small and large. There are three accounts that traders can open: mini account, which is the smallest, allowing you to trade $250, standard account which requires a minimum of $2,000 and premium account which requires high initial capital, upwards of $50,000. Premium accounts offer different levels of leverage, and additional services and tools to make your trading experience easier. For more information on trading methods please be sure to visit Lucror FX today!

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