HomeIntroduction to Forex Trading:
The term Forex is the short name for Foreign Exchange.
All over the world, there are several branches of the stock market, each with their own name. For example, some stocks trade on the Dow Jones, others on Nasdaq. Of course, all stock market transactions in the United States take place on FTSE in United Kingdom the New York Stock Exchange (NYSE). In other countries the same is true. The list can be quiet long as most countries have a stock exchange. There may be one or more distinct markets throughout the world.
What generally occurs on these markets however, international trade takes place on the market termed the Foreign Exchange Market, or Forex or FX, or currency trading. Several countries across the world in almost every time zone participate in trade on Forex market, with multiple currencies being utilized and stocks and commodities from all participating countries being offered for trade. Because there are so many nations and time zones involved, Forex does not function as a 'business day' entity like most domestic stock markets.
It remains open for trade 24 hours a day, 6 days a week. It is also the most liquid trading market in the world. The fact that the markets are open for such a long time is very attractive to traders. The real advantage of this is the fact that you do not get what as know as gapping. Gapping is when the market reopens at a higher price or lower price. It is much easier to trade using stop losses on the currency market as you don't have the fear of gapping above or below your stops.
Of course, these additional hours increase the risk factor intensely for those of us who are human and obviously cannot monitor our investments 24 hours a day. This is why it is very important to use stop losses. Most Forex Brokers these days allow you to have guaranteed stop losses at no cost. If you are looking for a Forex Broker the CFD FX Report has recently researched this area and have come up with who they believe to be the best forex broker in the market. Feel Free to visit there website or email them support@cfdfxreport.com and they can point you in the right direction. This means that the value of your holdings could potentially plummet overnight, while you sleep, because other countries are still trading while you are in a dream world. So if you are going to trade and continue to sleep ensure you have stop losses in place. This will help protect your capital.
This is one reason for several safety options, like limit orders, which we will discuss later. This is also why it is strongly recommended that your first attempts to make money on the stock market are not transactions that take place within the Foreign Exchange Market but on a standard nine-to-five domestic trading market. The use of limit orders and Stop losses actually make the Forex Market is a safer way to trade as opposed to normal stocks or indexes, as you don't get the gapping movements. A good example is if we look at some of the movements in 2008 we would often see the market gap down by up to 500 points, so if you were long on these positions that would be major losses.
So Forex Trading is the safer way to trade, but remember limit orders and stop losses are a must.
Happy Trading
About the Author:
CFD FX Report www.cfdfxreport.com is a real time tool for clients with an interest in the trading of stocks, indices and commodities globally.CFDs (Contracts For Differences) are one of the worlds' fastest growing trading instruments that allows clients to profit from a rising and falling market. The CFD FX Report is a company comprising of expert traders that analyse the market daily and are able to make recommendations for the following day trades based on this analysis. The CFD FX Report is released everyday at 6.30 p.m. (Singapore time) for review by the clients for the next trading day.
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