<?php $title = 'Forex Trading 6 Advantages Over Other 
      Investments'; ?>
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            <h1>Forex Trading 6 Advantages Over Other 
      Investments</h1>
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            <p>There are many different advantages to trading forex 
            instead of futures or stocks, such as: <BR><BR><B>1. Lower 
            Margin</B> <BR><BR>Just like futures and stock speculation, a forex 
            trader has the ability to control a large amount of the currency 
            basically by putting up a small amount of margin. However, the 
            margin requirements that are needed for trading futures are usually 
            around 5% of the full value of the holding, or 50% of the total 
            value of the stocks, the margin requirements for forex is about 1%. 
            For example, margin required to trade foreign exchange is $1000 for 
            every $100,000. What this means is that trading forex, a currency 
            traders money can play with 5-times as much value of product as a 
            futures traders, or 50 times more than a stock traders. When you are 
            trading on margin, this can be a very profitable way to create an 
            investment strategy, but its important that you take the time to 
            understand the risks that are involved as well. You should make sure 
            that you fully understand how your margin account is going to work. 
            You will want to be sure that you read the margin agreement between 
            you and your clearing firm. You will also want to talk to your 
            account representative if you have any questions. <BR><BR>The 
            positions that you have in your account could be partially or 
            completely liquidated on the chance that the available margin in 
            your account falls below a predetermined amount. You may not 
            actually get a margin call before your positions are liquidated. 
            Because of this, you should monitor your margin balance on a regular 
            basis and utilize stop-loss orders on every open position to limit 
            downside risk. <BR><BR><B>2. No Commission and No Exchange Fees</B> 
            <BR><BR>When you trade in futures, you have to pay exchange and 
            brokerage fees. Trading forex has the advantage of being commission 
            free. This is far better for you. Currency trading is a worldwide 
            inter-bank market that lets buyers to be matched with sellers in an 
            instant. <BR><BR>Even though you do not have to pay a commission 
            charge to a broker to match the buyer up with the seller, the spread 
            is usually larger than it is when you are trading futures. For 
            example, if you were trading a Japanese Yen/US Dollar pair, forex 
            trade would have about a 3 point spread (worth $30). Trading a JY 
            futures trade would most likely have a spread of 1 point (worth $10) 
            but you would also be charged the brokers commission on top of that. 
            This price could be as low as $10 in-and-out for self-directed 
            online trading, or as high as $50 for full-service trading. It is 
            however, all inclusive pricing though. You are going to have to 
            compare both online forex and your specific futures commission 
            charge to see which commission is the greater one. <BR><BR><B>3. 
            Limited Risk and Guaranteed Stops</B> <BR><BR>When you are trading 
            futures, your risk can be unlimited. For example, if you thought 
            that the prices for Live Cattle were going to continue their upward 
            trend in December 2003, just before the discovery of Mad Cow Disease 
            found in US cattle. The price for it after that fell dramatically, 
            which moved the limit down several days in a row. You would not have 
            been able to leave your position and this could have wiped out the 
            entire equity in your account as a result. As the price just kept on 
            falling, you would have been obligated to find even more money to 
            make up the deficit in your account. <BR><BR><B>4. Rollover of 
            Positions</B> <BR><BR>When futures contracts expire, you have to 
            plan ahead if you are going to rollover your trades. Forex positions 
            expire every two days and you need to rollover each trade just so 
            that you can stay in your position. <BR><BR><B>5. 24-Hour 
            Marketplace</B> <BR><BR>With futures, you are generally limited to 
            trading only during the few hours that each market is open in any 
            one day. If a major news story breaks out when the markets are 
            closed, you will not have a way of getting out of it until the 
            market reopens, which could be many hours away. Forex, on the other 
            hand, is a 24/5 market. The day begins in New York, and follows the 
            sun around the globe through Europe, Asia, Australia and back to the 
            US again. You can trade any time you like Monday-Friday. 
            <BR><BR><B>6. Free market place</B> <BR><BR>Foreign exchange is 
            perhaps the largest market in the world with an average daily volume 
            of US$1.4 trillion. That is 46 times as large as all the futures 
            markets put together! With the huge number of people trading forex 
            around the globe, it is very hard for even governments to control 
            the price of their own currency.
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