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The Successful Traits of a Forex Market Trader

Aug 17, 2007
The quickest way to use your investment capital to its maximum is Forex trading on the Internet. Foreign exchange markets offer certain advantages to the smaller and larger traders, thereby making foreign exchange currency trading more appealing than the other markets such as stocks, options and traditional futures. Some of the top reasons you'll want to use Forex trading on the Internet to become a more successful Forex market trader are as follows:

1. Forex is the largest market, trading at a volume of almost two billion, giving Forex traders unlimited flexibility and liquidity. That's over three times larger than the equity market and over five times larger than futures.

2. Forex trading is flexible and fits into anyone's schedule, as it is available on the Internet 24 hours a day, 7 days a week. Markets are always open, day in and day out. This flexible schedule makes the Forex market extremely attractive to professional and potential traders and investors.

3. Forex trading on the Internet involves buying one currency while simultaneously selling another currency. There is equal opportunity to make a profit no matter what direction the currencies are heading. There are, at present, only fourteen pairs of currencies to trade compared to the thousands of stocks, options and futures available for trade. This is a great advantage when considering the pros and cons of jumping into the trading game.

4. Investors and traders are flocking to Forex Internet trading as a way to gain a higher leverage for their investments. Some brokers even offer margin ratios of 200/1 in open Forex trading accounts. There are also those mini-Forex accounts that can be opened for a minimum of $200, offering a margin of 0.5%, where $50 in trading capital will control a ten thousand-unit currency position.

Forex prices are often predictable, allowing the currency prices to create trends that can be followed to allow the technically trained Forex trader to spot, and even take advantage of, the many entry and exit points. There are no charges for commissions, exchange or other hidden fees on the Internet making it one of the best assets of Forex Internet trading. The Forex market is a very easy market to research the countries and currencies involved. The only fees come from the Forex brokers, who make a very small percentage of what the bid/ask price is. Additionally, there is no need to calculate any commissions or fees when completing a trade and your transactions are made and confirmed within seconds. Also, as the process is totally electronic there are no people to slow you down.

There is some basic terminology that those of you who are new to the Forex trading game should know. The following is a list of terms and concepts you should familiarize yourself with:

Spot Market- Market for buying and selling currencies that are usually for settlement within 2 business days, also known as the value date. For example: USD/CAD = 1 day.

Exchange Rate- When the value of one currency is expressed in the terms of another. For instance, the EUR/USD has an exchange rate of 1.3200, and then 1 Euro is worth 1.3200 USD.

Currency Pair- All currencies must be sold in pairs. There are two currencies that make up an exchange rate, so when one currency is bought, the other is simultaneously sold and vice versa.

Base Currency- This is the first currency in a pair.

Counter Currency- This is the second currency used in a pair. The counter currency is also known as the "terms" currency.

Broker- A firm that will match a buyer to a seller for a small fee or commission.

Sell Quote- This quote is normally displayed on the left side and represents the price that you can sell the base currency for. The sell quote is also referred to as the "bid" price. For instance: EUR/USD quotes 1.3200/03, and then you can sell one Euro for 1.3203 USD.

Buy Quote- This quote is normally displayed on the right side and represents the price that you can buy the base currency for. The buy quote is also referred to as the "ask" or "offer" price. For instance, EUR/USD quotes 1.3200/03, and then you can buy one Euro for 1.3203 USD.
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