1. Lower Margins

As with futures and stock derivative trading, forex trading offers you the ability to control huge amounts of an asset by putting up a very small amount of margin. The advantage that the forex market has over the other markers is in the margin required. Typically, futures markets require roughly 5% of value of your holding, and roughly 50% of the total value for the stocks trader. Conversely, the margin required for forex trading is roughly 1%. JUST ONE PERCENT! For every $1,000 that you invest in the forex market, you can control $100,000. That’s significant leverage! This gives the forex trader 5 times more leverage than the futures trader and 50 times more leverage than the stock trader. This dramatically increases your profit potential. However, you need to have a good understanding as to how margin accounts operate, along with the associated risks.

One way to learn to trade is get a demo account. Several brokers offer demo accounts. One example is FX Club which offers free $100K demo trading accounts. Learn to trade the Forex with no risk. Here’s a link to allow you to sign up and get a free $100k demo account at fxclub.com. This is a free with no risk or obligation.

As I mentioned earlier, we will be presenting six reasons why the Forex is better. This is only the first reason. In the coming days, we will be presenting the other reasons.

This strategy has to do with trends. As I mentioned previously, professional forex traders will tell you “the trend is your friend.” It is, “until it ends,” as professional traders will also tell you. Here’s a forex trading strategy that follows the trend for a very, very short time, and has you exit the trade before the trend ends. For this trading strategy, you can typically expect to make 40 pips per trade while risking no more than 10 pips – that’s a 4 to 1 risk vs. reward opportunity. With this strategy, you can be wrong three out of five times and still make money.

The forex markets tend to have significant price movement immediately after relevant news stories have been released. These news stories give the latest results for a variety of economic metrics, including the PPI, the CPI, unemployment figures, etc. These results are reported on a fixed, regular schedule, so you can know when the news comes out. There are economic metrics released every week.

So how can you profit from this information? As I mentioned earlier, the forex market tends to move significantly as a result of these news stories. As an immediate result of any of these news stories, the forex may move 30, 40, or even 50 pips instantly. Of course this movement could be either up or down, so how do you know whether to go long or short on a particular currency? Again, the trend is your friend. Immediately after the news comes out (immediately, as in a few seconds afterwards) gauge which direction the currency has moved. If it has gone up more than 5 pips, go long that currency. Then immediately set a very tight stop-loss of 10 pips below the current price. Once the currency has moved in your direction 30, 40 or 50 pips, close out your position. If on the other hand, the currency has gone down more than 5 pips, short that currency. You will have gotten a nice return for just a few minutes of work with a controlled risk. Find an online forex trading broker and start making money today.

One forex trading strategy that you can use is called scalping. Scalping is a strategy that is used by traders who are looking for profits with minimal risk. With low risk, typically comes low return. That’s the case here, but since the risk is low, you can have predictable, reliable profits.

Another forex trading strategy that you can use requires that you first determine the position you will have to take on a particular currency pair. Once you have decided this, you can then put a buy or sell stop order to that trade. Then you don’t need to closely monitor the currency pair’s price movements. If there is a price break, due you will either gain or lose, depending upon the up or down movement of your currency pair.

Many successful forex currency traders indicate that, if you want to be successful in forex trading, you need to go with the trend. You can determine trends by using the pivotal points and reviewing the market to spot trends on any particular currency pair. Once you learn how to spot a trend, you can then place either a long or short position on that currency pair, depending on your perception of the trend that you have spotted.

A good, profitable forex trading strategy is the three day rolling pivots. The rolling pivot range, acts as a reference point for entering and exiting trades. It provides traders with a point of reference to quickly exit losing positions. One of its best functions is that it helps prevent a trader from turning winning positions into losing ones. This strategy is easy to follow, and a straightforward, basic way of gaining profits in the forex market. To set up your three day central pivot points, you need to use a pivot calculator. There are three sets of central pivot points. Consider these three sets of numbers that you have established as a range, with the largest number being positioned at the top, and the other two below.

You then need to consider that when you trade on top of the high point of this three day range, you will have a better chance of succeeding when you go for a short position. And when you trade under the smaller number of the range your chances of succeeding will be much better if you go for a long position.

• Currency Pairs: Every forex transaction involves two currencies, one currency that you are selling, and one that you are buying.

• Major and Minor Currencies: There are seven major currencies that are traded. All of the other currencies would be considered minor currencies. The major currencies are: United States Dollar (USD); European Euro (EUR); Japanese Yen (JPY); Great Britain Pound (GBP); Swiss Franc (CHF); Canadian Dollar (CAD); Australian Dollar (AUD).

• Base Currency: This is the first currency mentioned in the trade pair. You use the base currency as the measure of its value against the second currency. For example, a EUR/USD = 1.54400 means that 1 Euro (EUR) is worth 1.54400 United States Dollars (USD).

• Quote Currency: This is the second currency mentioned in the trade pair. Your profit and/or loss is a measure of this currency.

• Cross Currency: This is a pair of currencies that are traded in which neither currency involves the US Dollar (USD). Typically, these types of traded pairs, when traded, actually involve the buying and selling of two different currency pairs. The US Dollar is the main currency. So all cross currency trades involve trading the US Dollar , regardless. As an example, if you are trading the EUR/GBP pair, you are actually buying a EUR/USD pair and simultaneously selling a GBP/USD pair. Since these trades are actually multiple trades, they typically have higher transaction costs.

• Pips: A pip is the smallest unit of price for any foreign currency. Most currency pairs consist of four decimal places. The pip represents the smallest change in the fourth decimal place.

If you want to trade in the forex market, you must familiarize yourself with these six terms.