Sunday, July 23, 2017

Basic Ideas About Online Commodity Futures Trading

August 4, 2014 by  
Filed under General

Those who treat trading as a get-rich-quick scheme are likely to lose because they have to take big risks. If you act prudently, treat your trading like a business instead of a giant gambling casino and are willing to settle for a reasonable return, the risks are acceptable.

Anyone who is going to try speculation should be fully aware of and be comfortable with the risks involved. Managing the risks of trading is a very important part of any trader’s success. Although the risks can be managed, they can never be eliminated.

In order to make decisions about when to trade commodity futures, you must have a source of price data. All experienced commodity traders prefer to look at price activity on a chart rather than trying to interpret tables of numbers. In financial analysis, charts are indispensable for quickly grasping the essence of historical and recent price action.

There are two primary analytic methods for deciding when to take a futures position: fundamental analysis and technical analysis. Fundamental analysis involves using economic data relating to supply and demand to forecast likely future price action. Technical analysis involves analyzing past price action of the market itself to forecast the likely future price action.

If you are going to be involved in trading and investing in the futures, you need to strategize. You have to study your moves and make sure that you calculate each step that you take as you go along. You cannot simply rely on good luck when there is already money involved.

In order to be a successful trader, you must understand the true realities of the markets. You must learn how the professionals make money and what is possible. Most traders come into commodity trading, lose a substantial portion of their capital and then leave trading without ever having a correct perception of what good trading is all about.

Advantages Of Forex Trading

August 4, 2014 by  
Filed under General

The forex market is the largest and most liquid of the financial markets. Daily activity often exceeds $7 trillion USD a day. It is the existence of volatility within the forex market that enables trader’s to take advantage of exchange rate fluctuations for speculative purposes. Traders must be aware that greater volatility also means greater risk potential.

Forex trading operates 24 hours a day, five days a week. The greatest liquidity occurs when operational hours in multiple time zones overlap. The cost to trade with most forex brokers is the spread. This is the difference between the bid and the ask price. Spreads in the forex market also tend to be much less (or tighter) than the spreads applied to other securities such as stocks.

Leverage is expressed as a ratio and is based on the margin requirements imposed by your broker. As a trader, it is important to understand both the benefits, and the pitfalls, of trading with leverage. 2% margin is equivalent to a 50:1 leverage ratio. With as little as $1,000 of margin available in your account, you can trade up to $50,000 at 50:1 leverage.

When trading on leverage, the funds in your account (the minimum margin) serve as your collateral. Therefore, it is only natural that your broker will not allow your account balance to fall below the minimum margin.

The forex markets run all day, which is very advantageous to short-term traders who tend to take positions over short durations (say a few minutes to a few hours). For example, Australia’s daytime is the nighttime for the East Coast of the US.

There are 28 major currency pairs involving eight major currencies. Criteria for choosing a pair can be convenient timing, volatility patterns, or economic developments.

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