Friday, September 19, 2008, 12:12 AM
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forex trading ]
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If you are interested in trading currencies online, you will find that the Forex market offers several advantages over equities trading.
Forex
is a true 24-hour market, which offers a major advantage over equities
trading. Whether it's 6pm or 6am, somewhere in the world there are
always buyers and sellers actively trading foreign currencies. Traders
can always respond to breaking news immediately, and P&L is not
affected by after hours earning reports or analyst conference calls.
After
hours trading for U.S. equities brings with it several limitations.
ECN's (Electronic Communication Networks), also called matching
systems, exist to bring together buyers and sellers - when possible.
However, there is no guarantee that every trade will be executed, nor
at a fair market price. Quite frequently, traders must wait until the
market opens the following day in order to receive a tighter spread.
With
a daily trading volume that is 50x larger than the New York Stock
Exchange, there are always broker/dealers willing to buy or sell
currencies in the FX markets. The liquidity of this market, especially that of the major
currencies, helps ensure price stability. Traders can almost always
open or close a position at a fair market price.
Because of the
lower trade volume, investors in the stock market are more vulnerable
to liquidity risk, which results in a wider dealing spread or larger
price movements in response to any relatively large transaction.
100:1 Leverage
100:1
leverage is commonly available from online FX dealers, which
substantially exceeds the common 2:1 margin offered by equity brokers.
At 100:1, traders post $1000 margin for a $100,000 position, or 1%.
While
certainly not for everyone, the substantial leverage available from
online currency trading firms is a powerful, moneymaking tool. Rather
than merely loading up on risk as many people incorrectly assume,
leverage is essential in the Forex market. This is because the average
daily percentage move of a major currency is less than 1%, whereas a
stock can easily have a 10% price move on any given day.
The most
effective way to manage the risk associated with margined trading is to
diligently follow a disciplined trading style that consistently
utilizes stop and limit orders. Devise and adhere to a system where
your controls kick in when emotion might otherwise take over.
Sigma devotes serious effort to serve the emerging retail segment of the Forex community. Its
commitment to providing an excellent customer service, innovative
currency trading technology, and dealing practices, establishes Sigma
as a notable force that traders look forward to for an advanced Forex
charting, Forex news, and fund safety.
Customers funds deposited
with Sigma, are held and maintained separately in separated trading
accounts at our partner banks. Sigma also provides its customers a
variety of account plans, and services to choose from when creating or
adjusting a profile.
The professionals at Sigma are dedicated to providing the guidance you need to accomplish your investment objectives.