Ways to Trade The Forex Market

Traders in the have discovered a good number of ways to invest or speculate in currencies. Among many options, we will rely on the most popular ones. They includes;

Exchange Traded Funds (ETF)

Futures

Forex

Options

Exchange-traded Funds

ETFs are the newest among them in the currency exchange market.
Exchange traded funds allows traders to invest (diversify) in different assets. It could be in the form of a set of stocks combined with some currencies. It was created by some financial institutions and can be traded through an exchange like the stock and forex- the later being traded through a broker.
The only difference between ETF s and the forex is that market is not open 24 hours while the spot fx is all round the clock.
Again, since exchange traded funds are made up of combination of stocks, with other currencies they are definitely subject to trading commissions and other transaction costs.

Futures

We are not here to say what tomorrow will look like,ehh?
But we are here to talk about how to make your future fruitful trading futures.
Futures are contracts to buy or sell a certain asset at a particular price on a future date.
Imagine it as buying or selling something now against tomorrow.
Futures were created by the Chicago Mercantile Exchange (CME) years back in 1972. This was when bell bottoms and platform boots were invoke.
The market is highly regulated and transparent since it is traded through a standardized and centralized exchange. Every price of asset, and the transaction information are made known to investors.

Spot Market

As the name implies, currencies are traded instantly, i.e "on the spot," using the current market price.
We love this market so much because of the numerous advantages.
It is simple, liquid, has tight spreads, and above all, a 24/7 operations. Anybody on this mother earth could participate easily in this market if only you could have access to the internet. With only 25 bucks, you have your account opened without stress.
I will not advice you to take up a $25 account shaaa.
There are great disadvantages if you run a small account. We will discuss more of this in the Capitalization lesson.
One more advantage of the spot fx is, most brokers usually provide you with free charts, news, and research tools.

Options

In Option, the buyer the right or option, but not the obligation, to buy or sell an asset at a particular price with expiration date for that option.
If a trader "sold" an option, then he or she would be obliged to buy or sell an asset at a specific price at the expiration date.
Options are traded just like the futures on an exchange, such as;
Chicago Board Options Exchange, cboe.com
International Securities Exchange,  ise.com  or
Philadelphia Stock Exchange. nasdaqtrader.com
The disadvantage in trading options is that market hours are limited for certain options and the liquidity is less compared to the futures or spot market.
I would like to introduce to you the innovative way to trade the option just by saying a YES or NO. This is called Binary Option.
BINARY OPTION
Binary options are simply tradable contracts that permit you to agree or disagree (BET) on whether an event will happen or not in economic market? It can generally be referred to as “YES or NO” bets

Binary options are standardized and focused on most financial markets including forex trading and as well as some economic events. As a trader, binary options can add a new dimension to forex trading.


Do you want to become a pro in trading binary option?
Here are some of the best and reliable option brokers online:

 24Option 

 BetOnMarkets

 AnyOptions


We are here to provide you with the necessary training to kick star with financial betting. Visit this blog without ceasing.

Forex Market Speculation

In the stock market, speculation involves taking a position in order to profit from a certain outcome. This is not concerned with the underlying fact to forecast or predict the future of any company beyond it’s short term price action.
Speculators in the stock market are pushed to purchasing certain stock with the sole purpose of selling it to someone else at a higher price.
This may look obvious at the first glance but it seems not to be so later on.
Well every businessman needs profit, right?

But the truth is, there’s big difference between speculators and investors. Speculators don’t care about the value of stock but only think price will move up or down as there are more speculators accumulating the stock.
On the other hand, investor look at the logical value of stock at the long run, and tries to eliminate certain factors that could affect the price based on the economy, industry and business.

Enough of this stories, but I believe you catch the jist?
Let’s check it out with the forex market.

One significant thing about the market is that most currency trading is based on market speculation. This implies to how traders react to intraday price movement.
To say it in more understandable terms, most trading volume comes from traders that buy and sell based on day to day price movements.
Speculators can bring about 88% to 92% of trading volume daily.
Let share with a little on how I use to gain most time from market speculation based on price movement.
First, trend is king, never trade against the trend. Remember?
In a consolidated market, price direction cannot be ascertained. Investors like you and I will be seated, watching out for a breakout.

But once there is a break out on the upside or downside, you will discover price moving higher or lower than expected.
In the case of our chart above, we saw breakout on the upside. Price even moved higher.

Why the up breakout?
The market speculation was greater on the upside. This is so because even while the price was consolidating, Buyers and Sellers were taking positions with the expectation that price will respect their call. Surprisingly, the sellers lose.
One can profit from this by;

1.  Waiting for a breakout to know which side leads the intraday price.

2.  Waiting for price to reach point of no return in (no reversal candle or pattern that is evident of changing) price movement. This is to avoid fake-outs.

We will see to that later.
One can easily measure a speculative market if liquidity is extremely high.
What’s Liquidity?
It is the amount of buying and selling volume happening at any given point in time.
If liquidity is high, it makes it easy for anyone to buy and sell currencies. Traders can easily detect market direction and join the trend.
As an investor in the forex market, you dare not eliminate the importance of liquidity because it determines how price can change over a given time period.
With little effect on price action, a huge trading volume could be achieved in a liquid market like the forex business. This also could depend on the currency pair, time and day of the trade.
You will discover which time is best for each currency pair and the best day to trade in order to expect a huge profit. Liquidity is high at such time and days.
Before we get to that, let’s take a look at different ways to trade the currency market.
     

Dollar Rules The World

From our previous lesson, we saw how often the U.S. dollar is traded in the spot forexmarket. It takes wholly about 84.9% of all reported transactions.
The USD is one half of every major currency pair, and the majors comprise 75% of all trades.
It is therefore very important to pay attention to the U.S. dollar.
The US Dollar rules the world!

According to the IMF, the U.S. Dollar is made of about 62% of the world's official forex reserves. Because almost every investor, business, and central bank, pay attention to the United States Dollar.
Reasons why the U.S. dollar plays a central role in the FX market:

• The United States of America economy is the largest economy in the world.
• The U.S. dollar is the reserve currency of the world.
• It has the largest and most liquid financial markets in the world.
• The U.S. has stable political system.
• They are world's military superpower.
• The U.S. dollar is the medium of exchange for many cross-border transactions.

Let’s take for example oil is priced in U.S. dollars. So if France wants to buy oil from Nigeria, it can only be bought with U.S. dollar.

If France doesn't have any dollars, it has to sell its francs first and buy U.S. dollars.

Hello Mr Reader, I hope it’s entering?