Page 202 – XTrade

Why Trading in Foreign Currency is a Worthwhile Investment

Every trader wants the best for their trading, a risky but rewarding business. Investing in foreign currency makes the impossible.. possible in terms of gain.

Investing in Foreign Currency is a Serious Challenge

The currency trading Australia’s brokerage industry offers is very competitive and among the best in the word, in terms of leverage levels, efficiency and overall trading experience. Foreign currency trading is a very exciting and challenging way to invest in the money markets, on a short term basis ranging from few minutes to possibly several days. Most traders trading online are focused on popular trends, trends that most market participants agree upon. Investing in foreign currency however can span beyond just few days, and it can last weeks or even months. The general idea however is that most price swings can be captured around market cycles which typically last for a few daily sessions. The forex market offers great flexibility, as one pair rises or falls, the two different currencies in that pair tend to move essentially in different directions, and the movements are solid, and often of significant magnitude. Investors make good money through trading currencies, some professional bank investment traders make their banks more profits from currency trading than they make from all their other investments combined. The risk is there, it is real, but they have it under some basic control, where if wrong, they can limit losses and close their positions.

How Traders Make Large Profits

Most traders trading online are aware of basic fundamental trends in various currencies, and attempt to make trades in the right direction, usually one or two per currency pair per week. Investing in foreign currency this way, yields most profit when inter-market analysis is taken into account, and the trader pays close attention to other correlated pairs. Even though one currency pair is traded, the trader thinks like an investor, and looks at all correlated pairs. Different pairs weigh most on the pair in focus, on any given week. This allows the trader to adjust trading size, entry points and even change their initial analysis and perspective if necessary. The reason forex trading and investing is more profitable than stock trading, is because there’s more flexibility and hardly a week goes by without offering an opportunity. Whereas in stocks and commodities traders often face week after week, where no confidence is found in either direction. And excessive risk prevents them from making large trades. Currencies will always be attractive to trade, one way or another, as they have no restrictions and offer great flexibility. Stocks on the other hand, and even commodities, are seen as a secondary kind of market where opportunities will arise only once in a while, in specific cases. Currencies offer great opportunities week after week, and the seemingly small weekly profits can end up compounding to spectacular annual figures.

Forex Strategies Brokers Can Facilitate

Some trading methods can be applied to all currency pairs. But there are forex strategies which are pair-specific and rely more on fundamentals over technicals.

Forex Strategies Various Traders Use

Different traders use different forex strategies, and each one comes with some unique rules and criteria for each and every trade that the trader makes. Most good Forex brokers Australia’s seasoned traders use, do offer the tools and the flexibility to trade as a day-trader. Day-trading is perhaps among the most widely promoted trading methods by many brokers and the industry itself, as more frequent trading generates more commissions. It is one of the most difficult strategies one can implement, and also the most profitable for the trader themselves. But good brokers offer more than just day-trading tools, they offer so much flexibility that all kinds of trades can be executed with precision. Trading online has become smoother in recent years, as the brokerage industry has improved in many countries of the world, and Australia is at the forefront of it all. Traders are able to trade specific currencies, based on in-depth fundamental analysis and some day-to-day technical analysis. While other traders use a more simplistic, technicals-only approach, which applies to all currency pairs. Most new but wise traders start their trading using evolving strategies. Ones that will not create panic situations and will give them plenty of time to figure out when to take profits and to cut losses. While there’s nothing wrong with day-trading, it takes much more skill and stronger psychology to trade at fast pace. Trading on news for example can be very difficult. Brokers however make it possible to trade at high speeds, and those who know how to trade do make money day-trading.

Brokers Want Clients to Have a Good Trading Experience

All good brokers want their clients to stay with them for many years, as loyalty is important. So they offer their clients all the best that can go on a trading platform, to facilitate all kinds of forex strategies. Even if a client trades only once in a while, they are still a good client. Even such clients often end up figuring out profitable trades having very low risk. These clients, unlike maybe the high frequency day-traders, usually end up making fewer trades but with much larger size. Even today’s small size trader, may become tomorrow’s large size trader, so brokers respect all clients equally well. The competition in the industry has forced many brokers to constantly improve their platforms and the quality and accuracy of their forex charts. Almost to the point where one can trade using one broker, no matter what the strategy is, without the need to pay for a premium chart subscription service, which often would cost as much as several $100s a month. Only day traders do often need such premium services, and only for the purpose of ultra fast day-trading. The brokerage industry can facilitate fast trading, many kinds of strategies already.

Best Guide for CFD Trading of Stocks and Shares

Investors and traders have some common ground in the markets, their time frames often overlap. CFD trading facilitates the needs of both in various ways.

Complex Stock Investing through CFD Trading

CFD trading has become very popular in the last 10 years or so, this is for various different reasons which range from tax planning to flexible trading terms, and better leverage which makes even expensive stocks much more affordable to trade or invest in. Many know what is CFD trading all about, and they certainly all know about the affordability leverage offers. But CFDs also offer other more subtle advantages, such as the ability to go short a stock, even when the same stock in the stock market is under short selling restrictions, during extreme bear market times. CFDs also offer a kind of unfair advantage to the trader, because the trader has all the liquidity they can possibly need, at all times. Which results in better filling prices, and overall higher profitability. Trading the stocks themselves, often comes with liquidity issues, and traders end up getting bad filling prices, especially when wanting to close a profitable long trade and the stock is already falling on profit taking. CFDs are even better than Futures in that regard, and provide the most one-way liquidity to the market, while shielding the trader from many adverse liquidity issues.

CFDs Make it Easier to Make Money when One Already Trades Profitably

CFD trading doesn’t help traders turn their trading around from losing to winning, it only helps boost profitability of already profitable trading strategies. Trading online is often advertised as an effortless and ultra affordable low risk game, but this isn’t so of course. Risk and confusion are always in the market. Stock investors often find themselves in a dilemma when holding onto stocks, stock that will rise over the years but are bound to have downward corrections in the short term. This is when investors become traders, using CFDs. Online CFD trading does in such cases allow these investors-traders, to make $1,000s during these corrections, even when short selling restrictions are imposed on the said stocks. Thereby significantly increasing the profitability of their investment portfolios. Investors are more selective on choosing stocks to invest, while traders who only trade CFDs without holding the underlying stocks, tend to trade in both directions. Traders are less concerned with the quality of the stock, and trade many more stocks than the typical investor holds in their portfolio. CFDs are very efficient trading instruments in the hands of these investors and traders. Then, there are some tax related benefits, which are more or less straighforward in most western countries. These allow traders and investors to offset some of their capital gains tax liability against losses.

The Best Forex Broker Australia Has

Using the most efficient way to trade is critically important, that’s why it all comes down to the best forex broker Australia has to offer to local traders.

What is So Unique about the Best Forex Broker Australia has to Offer

Finding the best forex broker Australia has to offer today, is very important to local traders, traders who will not settle for anything less than the best out there. There’s so much more to Choosing a forex broker than just making few comparisons and asking around. This has to do with finding little but critical and accurate information, rather than all the information regarding various brokers. Most clients will give feedback and make comments about their broker, based on their low size trading, and through their overall experience. And experience which for the majority of traders, especially new ones, the whole focus of the feedback resonates around a penny wise-pound foolish mentality. Most of them are focused on free offers, bonuses, ultra low trading commissions and to some extend on customer service. And while these things may seem important, they are not really nowhere near as important when it comes to trading profitably. What really matters is trading stability, the flow of the live forex rates and the overall efficiency of the trading platform. What is the point of using a ultra low commission broker, if they charge you little per trade, but you are being given requotes and slippage on every trade, in addition to poor filling prices. Trading efficiency in the brokerage industry is everything! No matter what the transaction cost is, only an efficient broker can really facilitate profitable trading for serious traders.

Why New Traders Give Shallow Feedback

New traders tend to glue themselves on forex charts and down to the minute analysis, and even news based strategies for trading. All of which could work in the hands of a seasoned trader, but not in the hands of a new trader. So these new traders tend to have a bad experience in the end, because they are unaware of the slippage and requotes issues surrounding the reality of trading. These problems are inevitable, and they affect even the best forex brokers, but to a much lesser degree. In addition, they tend to blame their whatever broker for things that the broker is not responsible, it is their own trading strategy and way of implementation that is to blame. But nobody wants to blame themselves, so it is convenient to always blame someone else instead. New traders tend to give bad, meaningless feedback, as they trade small size, fast, and they often base their judgement on ridiculous things as well, such as free offers and bonuses. There are brokers which for example offer a $25 sign up bonus, which in the eyes of many penny wise -pound foolish traders sounds like a hot deal not to be missed. To a serious trader, $25 is 5 seconds of profitable trading and certainly not much of an incentive to choose that broker over another. The best forex broker Australia has to offer goes beyond and above ridiculous offers, and offers what matters most, efficient trading!

What to Expect from a Forex Trading Course

A forex trading course can teach basic ways and methods for developing unique trading strategies over time. It is a good first step towards learning to trade.

What a Forex Trading Course Really is

A forex trading course is the first correct step towards learning to trade. There is always a long learning curve in order to learn forex trading and understand what is forex suitable for. New traders tend to have big, unrealistic expectations, where they want to make a lot of money right from their first year of trading. And while this is not impossible to achieve, it certainly is very difficult. Most new traders tend to follow generic trading systems and lame strategies, taught by generic teachers, who themselves were not spectacularly successful in trading. Other strategies may be powerful, but are hard to emulate and properly implement. So, there’s no easy way to big profits when it comes to trading. Generic and poorly planned trading systems will always fail, as the market is always more unpredictable than those systems can handle. A good course however will present these facts, and prepare the traders for realistic expectations. The bottom line reality is that most good traders become good after at least 5 years of trading. Promises of success that rely on few months of trading or even 2-3 years are not good enough. Because these time frames are not long enough to allow traders to experience changing volatility and unpredictable currency moves, which are bound to happen over a 5 year period.

Traders Lack Confidence

All traders face times of fear and uncertainty, new ones even more so. A forex trading course can certainly take years off their learning curve and can help them avoid some of the mistakes that others made. Mistakes in trading are many and sometimes difficult to detect. Many wonder what is spot market trading, and what is cfd trading, and while each has its unique characteristics, one can start to trade perfectly well and more safely through cfd contracts. Especially as traders complete their courses, and start trading with larger and larger size, the benefits of cfd contracts become apparent. Other questions new traders face are things like stop loss size, risk tolerance and money management. A good course will always focus on psychology and money management, which are more important than learning how to pick entry points in the market. The course in question may teach momentum based techniques, or other more advanced techniques, but none will be perfect. All techniques for trading suffer to some degree, and are bound to produce false trading signals. This is because all indicators and analysis techniques are inherently bound to be inaccurate about 50% of the time. So good traders learn how to adjust and embrace false signals, and overall uncertainty. The only thing that finally boosts traders’ confidence is long term profitability, where it becomes evident that these profits are the result of planning and not luck.

What is Foreign Currency Trading So Beneficial

Foreign currency trading is more attractive than for most other instruments, because of the flexibility, liquidity and profitability that the diverse forex market offers.

What is Nice and Unique about Foreign Currency Trading

Foreign currency trading is promoted by many brokers and software vendors as a market that offers high leverage and easy money. While leverage is good, it is hard to learn forex trading and make consistent profits out of it. The global foreign currency converter infrastructure has some hidden advantages that are not found in most other financial markets. These have to do with the ability to hedge one trade with another, in ways that are not easy to implement say in stocks or in most commodities. This hedging allows traders to be wrong in their judgement, and still manage to make money, through a series of hedging trades. Another unique advantage of the forex market is the Carry trade, where traders make money from interest rate differentials. And again hedging is required to offset, or at least limit adverse price movement. The forex market is more forgiving to rookie traders and traders who make mistakes. Whereas in the stock market, one mistake could be catastrophic as all stocks tend to move in one underlying direction, and once in the wrong trade hedging becomes very difficult, at least when using stocks alone.

What about Predictability?

Investing in foreign currency pairs is all about country-specific analysis, where the economy of the country is analysed. Currencies are easier to predict than stocks, this is because of many reasons, one of them being the decentralised nature of the forex market. As information is spread wider around the world, and the basic trend of a currency is easier to figure out than that of a specific company’s stock. Foreign currency trading is therefore more flexible, less stressful and better meets the needs of creative traders, traders who are original thinkers. Currencies are still volatile and tricky to figure out, but the are smoother when there are solid trends in place. They are also more liquid than stocks, and when the investor or trader knows how to predict a move in price, they stand to make good money. Stocks are harder to trade, especially in the short term, because trading action is directed from the centralized trading floor, where many new trends are initiated. As far as day trading goes, one is far better off trying their luck with currencies than with stocks. Currencies tend to make their highs and lows during specific time zones, for example one currency may have the tendency to make its move during the European session. While another has a tendency to make its move during the Asian session. And liquidity is good around the year, there are no light volume days or months. Also, currencies offer flexibility on analysis methods. One currency may be highly technical, while another trades strongly on long term fundamentals.