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Basic Trading

FOREX - Foreign Exchange

The Forex Market,aka the Foreign Exchange market is the largest financial market in the world With trading volume of over three trillion dollar a day,trading volume that is larger than the trading volume of the world five major stocks markets.In the Forex market most transactions are done for speculations purposes.This data helps making sure that the market will be always volatile and vigorous with plenty of possibilities of making large profits.

Forex market benefits

Continuous trading- the trading is constant from Sunday at 11 PM till Friday at 11PM.

The trading volatility is divided to three major time:

  • The European session:10:00-19:00
  • The American Session: 00:00-15:00
  • The Asian Session: 11:00-02:00

The ability to make trades in both directions-it gives the traders the possibility to gain in deals regardless the market direction either it's a bullish or a bearish market.

Leverage trading-allows the trader to trade on his margins and use the leverage that is given to him to make deals in larger amounts of money and make profits on the leverage deals.

High volatility-as a result of the high trading volume the trader can buy and sell his commodity at any time in the market price.

Low commissions-in contrast of other financial market there is only one commission charge when you enter a deal and that is the spread between the bid and ask prices. There are no more commissions such as withdrawal fee and etc.

A selection of currencies,commodities and index's-over a 100 pairs of currencies and a wide selection ofcommodities that allows the trader to find his own specific risk management and yield desired.

  • The fluctuations in the Forex market causes from several of fundamental economic factors.
  • Those factors use as important economic indicators of the national economy that influence the traders and the currency strength and price

Here are a list of the basic factors that influence the currency rate:

  • Economic growth indices such as the gross domestic product (GDP),unemployment claims,producer price index(PPI) and etc.
  • Trade balance, consumer confidence and industrial production.
  • Inflation level and inflation expectations.
  • Federal funds rate.
  • The country ability to pay off her debts and the trust that the world financial markets have in her economic and currency.
  • Speculation trades in the financial markets.
  • The development of the world financial markets.
  • Net Foreign Purchases of Long-Term Securities

CFD-Contract for Difference

CFD is a simple and effective financial instrument for indices and commodities trading.By using low margins (between 1% – 5% of the contract size) the contract set as an agreement between the both sides in order to settle the difference between the deal open price and the deal close price. The cfd's imitate the price changes of the basic asset that they following without the need to actually hold the basic asset The cfd's is a financial instrument from financial derivative section. That's explains that the cfd price is derived from the basic asset price. When you buy or sell a cfd your not actually hold the indices or commodities or any other instrument for that matter , what you actually have is a contract that assure you the differences in the price between the trade open price and the trade close price. The cfd's were developed in order the allow the trader to enjoy all of the advantages of trading those financial instrument without actually hold them. It's understandable that the trader doesn't enjoy the privileges that are given if he would hold the actual basic asset but the cfd price is almost identical to the actual asset price that his based on and he is quoted as a spot price. The price of the cfd is quoted in real time and he is influenced directly from the basic asset price that is trading in the stock market or in the banks inside trading, An example of a cfd trade – the basic asset of a oil barrel the actual price of one oil barrel, so in fact one contract of cfd is the price of one oil barrel.if the price of one oil barrel is 80$ that means that cfd price will be aproxametly 80.00-80.05. The difference between the buying price and the selling price is called spread.The spread is the commission that the trader actually pays the broker for the ability to trade an asset without actually holding him.If the trader wants to buy a 1,000 oil barrel at 80$ a barrel he will have to hold only 1% of the money required to hold his position with the help of the leverage.Instead of deposit 80,000$ (1,000 barrels * 80$ price of a barrel = 80,000$) ,he will need to deposit only 1% that is actually 800$.the trader will gain or lose money in throw his leverage deal of 80,000$ and not throw his margins off 800$.