Which Markets to Trade? FOREX http://www.financial-spread-betting.com/forex/spread-betting-forex.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! The foreign exchange market, also known as forex, currency trading, spot forex and FX; can offer attractive opportunities to spread traders, even during turbulent market conditions. The currency markets are highly liquid with the global forex market being worth some $4 trillion-a-day. If you are interested in forex trading, you can actually trade forex through financial spread betting and currencies like the euro/pound have always been popular with traders. Most spread betting providers offer trading on a wide range of major and even exotic currency pairs. The added advantage is that with your same spread betting account you can trade a wide range of other financial markets that are often impacted by fluctuations in the forex market.
Trading Forex Markets: A question that always comes up when someone starts trading is what market should I trade in? And what financial instrument(s) in that market are best?
It can be very confusing for a beginner, as there are just so many markets and ways of trading, and you can trade in virtually everything (even the change in house prices, if you include products such as spread betting). To start with, let’s look at the four main markets.
First we have Forex, or the foreign exchange market. This is concerned with currency conversions, such as how many dollars my pound sterling can buy. Secondly, there are stock markets in all major countries, with some countries such as the US having several, and on these you can trade stocks and shares. The terms are used interchangeably, but often the word stocks is used when you have interests in several different companies, and shares when you’re talking about a particular company, e.g. shares in IBM.
The third major market is indices, such as the DAX, the Dow Jones Industrial Average, the FTSE, etc. These are combinations of stock prices, calculated in different ways for each and giving a general reflection on the health of a country’s economy. And fourthly, we can consider trading on commodities, which you may recognize as oil, gold, wheat, and other major goods.
Which market you choose depends on a variety of factors. When you are trading, you need a measure of volatility, which is price changing, so that you can make your profit. The only exception to this is if you trade options on the underlying financial instruments, when you can make money when prices don’t move – but discussion of that is beyond the scope of this course.
It is a matter of personal preference how much you want to see the price change. If you are daytrading, you need the price to move fairly often to a significant extent, but with swing trading you may be satisfied with steady price changes over several days. It comes down to how you trade and also your personal disposition.
Within each of the four markets you will see differences between different products. Some will move smoothly, the prices of others may move in a jagged and erratic way. This will also vary over time, so you need to learn the market that you are trading in.
Considering first the Forex market, this is huge. There are exchanges all around the world, and the market is open 24 hours a day, closing only at weekends. A large market is good for trading, because you have liquidity, which means you can easily trade at any time, and the fees and spreads will tend to be small, saving you money.
The most common currencies traded on Forex are the Great British pound, the US dollar, the euro, and the Japanese yen. These can be traded in all sorts of combinations such as the EUR/USD, GBP/USD, etc. There are many other currencies available, including some called the “exotics”, but it is as well to start off trading the big ones.