The impact of the Internet on the participants of the forex market.
In the good old days when the foreign exchange market is only reserved to the institutional banks and the hedge funds, the forex market is only reserved to the selected few wealthy groups. However, with the dawn of the internet age, the playing field has leveled and the arrival of the Internet has changed the way trading works. Now, individuals like you and me can easily participate in this market. The biggest, most liquid financial market in the world with a daily turnover of 4 trillion dollar as of 2010!!
Benefit of trading in the forex market
It’s the most global market that moves around the clock!
Forex market is a decentralized over-the-counter market. This means there’s no single place where it has entire control over the market as the market moves around the clock according to market hours round the world. So unlike the stock market where the local market usually closes at 3pm in the afternoon, traders can forex trade online during Asian times, European times and American hours. 24 hours 5 days a week.
The power of leverage:
What is leverage? An analogy I liked to use is when we purchase a house on mortgage. investire in borsa Let’s say the house is worth $100,000 and you have $30,000 in cash. You don’t have the rest of the $70,000 to pay the entire value in cash. So what do you do? You get a mortgage from the bank for $70,000 to help you complete your house purchase. In forex, it is not unusual to see leverage of 50 times, 100 times or even 200 times of your contract size. What this means is let’s say you are using 100 times leverage: with $100 dollar you are potentially controlling $10,000 worth of currency to forex trade online. With $10,000, even a slight movement of the 4th decimal places (trader likes to call it a pip movement), will yield you an increase or decrease of $1 change.
Few selection, more focus
Unlike stocks where you literally having thousands of companies to choose from across a range of different sectors, forex trade online is mainly comprises of the major pairs such as EUR/USD, USD/JPY, GBP/USD, USD/CHF or commodity based pair such as the AUD/USD or NZD/USD. Because there are only so few pairs to choose from and every pair in a sense is connected because most of the world currencies are pegged to the US dollar. This allows trader to see the interconnection between how one pair may affect another and being able to understanding how one pair may interact another is an important skills to have for traders to make sound trading decisions to forex trade online.
Nick is a 22 year old Chinese Canadian trader from Hong Kong and he has been forex trade online for 2 years. His specialization in FX is trading the EUR/USD and USD/JPY on the 1min/5min/15mins chart with multi-time frame analysis using scalping techniques. He has compiled a lists of recommended educational program and brokers that traders can use to jumpstart their trading career. He has also created a trader resource section to empower like-minded traders to enhance their trading techniques.