When you find a desire to try out new things, you usually have a tendency to jump right into it and see where it leads you. This is a common human instinct – since everything is so new and exciting. And why not? It’s in our nature, after all, to crave new things and try to develop new skills through innovative experiences.
However, when you attempt to get into all the action that the trading market has to provide, you might want to take a step back and ask yourself a few simple questions. How does Forex trading work? What are my personal trading goals and dreams? What are my strengths and weaknesses?
As you keep going, even more questions will come up, which is natural. It is imperative to always question yourself and your journey since it is the only way to discover new things and improve. Stockscm knows this best – constantly improving is the only way to thrive.
You must be wondering – will this be just another Stockscm review, listing all of the glorious things about yet another trading platform? The answer is – we aim to provide you honest Stockscm feedback through this article. And what does it have to do with creating a trading plan? Well, Stockscm helps you achieve that in a few simple steps.
Asking the Tough (and the Right) Questions
When you first start getting curious about any new thing, you can get easily distracted, or even discouraged. You soon realize that there are so many things that you don’t know. New terms, new ways of thinking… And what about the deep and detailed history of it all? Because you need to know what came before to understand what is happening now.
In order to avoid this, the Stockscm platform offers a solution. Several ones, actually. The main one being – constantly questioning everything you know. This is the only way to improve your knowledge and yourself as an individual trader.
What are My Trading Goals?
There are so many things you can achieve while trading on the global markets. Similarly, there are even more trading goals you can come up with when engaging in trading. Do you want to learn, or just have some fun? Do you like to investigate and do the research before jumping into something, or rather just jump headfirst?
This is what makes a clear distinction between people – what kind of nature they have within themselves. This nature is easily detectable in everyday trading. Based on the position you want to open, for example, you can learn quite a lot. Are you dedicated to achieving goals in the long run, or rather earn some quick profit? You decide!
What Are My Strengths and Weaknesses?
This is a logical next question that opposes itself. Are you fast-paced and like to take risks, or are you patient and cautious? Whatever the case may be, it is quite important to detect and assess both sides of the coin. This is the only way you will be able to minimize the risks from your weaknesses while bringing your good sides into a well-deserving spotlight.
The best way to find this out and research it is by watching and analyzing your own trades. This way, you can detect where you did wrong, and what can you improve. In addition, in Stockscm you can find new and creative ways to improve your trading skills. Slowly but surely, you will find yourself managing your stress better while keeping your eyes on the prize and a clear head on your shoulders.
Knowledge is Key
Learning new things is not only fun, but it is also crucial for developing a trading strategy. Many would argue that you need to have a lot of knowledge or experience to enter the market. Stockscm disagrees! While having experience can never be a downside, anyone is free to join and try it out. This is the main advantage of the Forex market – it is open and inviting to all.
Still, having a lot of facts to rely on is quite important. Namely, there are so many traders that like to jump into things, hoping they will work out. But, that rarely happens. And as a result, they lose even more money than they initially expected, and so, the vicious cycle continues. To avoid this from happening, creating your own trading plan is imperative.
Building a Trading Plan
So, how do you move through the creation of your trading plan? After you got to know yourself a little bit better, you can move on to learn more about the market itself. While the market is quite unpredictable, there are still things to consider and assess.
For example, you can look at the many political factors that are affecting a single day of trading. Are the countries having a huge political meeting or a conference, or are they in a confrontation? All of this will affect their respective currencies, as well as other assets and their relations.
Strategy and Tools
A big part of developing your trading plan is creating your own unique strategy. Similarly to the companies that create their huge and detailed business strategies, yours is quite an important one, too. Namely, you should reassess your goals and strengths, and decide what you want to achieve with them.
During this part, you will be tempted to compare yourself with other traders that are doing well. While this may seem like a good idea, it is not useful in the long run. Because each trader is different and unique. What works for them may not necessarily work for you. And why is that? Well, as we mentioned before, you are different because of your trading goals and dreams.
Lastly, this is quite an important part of everyday trading. Much like in life, in trading as well – timing is everything. But still, you can’t predict it. All that remains is trusting in yourself and the trading plan you created, hoping it will play out. The market is unpredictable, but appealing thanks to that fact. And the timing of your next trading move is solely your decision. So, what is it going to be?
The Foreign Exchange or Forex market offers the largest number of trading opportunities in the world. Every day more than $1.8 trillion in volume is bought and sold over the industry’s decentralized system. Given that FX investing is one of the newest ways to earn a profit online, the speed with which it has gained popularity is impressive. Forex trading involves comparing two currencies and deciding which is likely to appreciate more over a given period of time. This type of speculation features 5 unique reasons why currency pair trading is a great choice for beginning investors.
At its heart, Forex is comparing the performance of two economies, as represented by their regional currencies. For example, when the U.S. economic outlook is good, the price of the dollar goes up. Likewise, a strong U.K. economy boosts the Pound, and when the EU is doing well, the Euro is worth more. As a FX trader, you first need to look at financial reports and recent news to determine which of two currencies is likely to do better.
You will then open an order by simultaneously purchasing the currency whose price is expected to go up and selling the currency whose price is expected to go down. When you are ready to close the order, simply reverse the transaction by selling the currency you originally purchased and buying the currency that you originally sold. Your profit is the difference in the price between the open and close of the order. This makes Forex trading one of the easiest investment opportunities to understand.
The Forex market is open 24 hours a day between 5pm EST on Sunday and 5pm EST on Friday. There are also dozens of currencies that can be selected. This means that no matter where you are located, or when you have free time free, you can always find an asset that’s available for active trading. Most other markets have much shorter hours or offer fewer choices. Some brokers even offer specialized software that lets you plan in advance to make the most of potential market conditions, by letting you create orders that go into effect if certain conditions are met. This way, you never miss out on a trade.
Unlike traditional stocks and commodities investing, in Forex, you are not taking physical ownership of an asset. Instead, you are only concerned with price differentials at the beginning and end of each trade. This format means that you can profit both when an asset’s price is going up, as well as when it’s going down. So, if you see economic news that makes you believe the Pound will lose ground to the Dollar, you can sell the GBP/USD currency pair. At the end of the order, you would buy GBP back at the lower price, and keep the difference as your profit. This gives you even more ways to make the most of your deposit.
When beginners are searching for new chances at high earnings, these three things are a major part of why Forex is a good fit for most new traders. Another important part of successful FX investing is choosing the right broker.
Cryptocurrencies, also known as digital currencies or altcoins, are a relatively new type of asset. They are decentralized and do not have oversight by any outside authority, unlike fiat currencies such as the dollar or euro. The first popular one, Bitcoin, was created in 2009, and now has hundreds of competitors, such as Ethereum and Ripple. While these payment methods were first viewed primarily as an anonymous way to transfer funds, they are now more mainstream thanks to increased global acceptance.
Digital currencies are usually created, or “mined”, using powerful computers to solve difficult algorithmic puzzles. There is an electronic ledger which tracks when a new coin is created. The ledger also has a record of the location of each coin as it is transferred from person to person, but the actual name of the person who owns the coin is not listed. Individuals can also buy altcoins through peer-to-peer networks where the price is set by an agreement between the parties.
Ancient cultures such as the Egyptians, Greeks, and Romans created easily portable coins that could be exchanged for goods and services. However, consumers soon realized that government backed money could easily lose or gain value based on the policies of those issuing the credits.
For example, let’s say the value of a single unit of a country’s currency was originally worth 0.2 percent of the total value of a country’s net worth. Then government decides to create twice as many coins to pay its debts, without increasing the country’s productivity. Each coin is now worth only 0.1 percent of the country’s total net worth, leading to an immediate loss in its value and buying power. This loss of value and subsequent rise in the price of goods and services is called inflation.
Governments can also influence the value of a currency by making it harder or easier to borrow money. They do this by changing the interest rate that the country’s national bank, normally referred to as a Central Bank, uses to lend money to retail banks. When interest rates are higher, these retail banks can offer better returns, and foreign investors buy more of the country’s currency, once again increasing its value. On the other hand, lower interest rates reduce investment and cause the currency’s value to drop.
For those interested in cryptocurrencies, the ability of a government to influence the value of the local currency is problematic. If the country runs into economic difficulties, or has a political upheaval, those in charge can easily take control of the local money.
Depositors in several European countries learned this the hard way during the recent global recession, when pensioners were forced to turn over all or most of their retirement funds to the state to help with budget shortfalls. Because cryptocurrencies like Bitcoin were not held in banks under government control, these funds were kept safe from seizure.
The rise of online trading has allowed investors to profit from price movements in cryptocurrencies, without having to physically purchase the underlying altcoin. Many CFD brokers are even letting clients trade cryptocurrencies like Bitcoin against exotic assets such as oil or gold.
Online trading offers more opportunities for the average investor than most other popular methods. There are several advantages to Forex trading. Because of the large number of assets that are available, combined with the ability to trade using leverage, people can place orders for a relative low sum, and easily see returns of 10 percent or more.
However, the high level of volatility means that investors must carefully manage risk to keep track of profits and losses. Otherwise, gains could slip away during market direction reversals.
The primary benefit of trading on foreign exchange circuit is that you can diversify your portfolio within seconds just by placing new trades. With other types of assets, you can only choose one specific instrument to trade at a time. This makes balancing your portfolio complicated, because you have to juggle multiple accounts for everything you trade, often with each login resulting in a separate user fee.
However, with FX, you can place a BUY order on EUR/USD, and then within a few seconds, place another BUY order on USD/JPY. In fact, you can even hedge your risk by placing a BUY and a SELL order for the same pair simultaneously.
In addition to giving lots of choices for ways to make money, currency trading can be done from almost anywhere with little to no interference from a third party such as is required when trading traditional stocks or commodities. These intermediaries often charge a commission for providing a service.
All that is needed to work in Forex is a computing device, such as a desktop, laptop, tablet, or mobile phone, along with a stable internet connection. This lowers the costs of participating in the FX market when compared to putting your money in an account with a bank.
The volatility of the currency market can work in a trader’s favor. Because much of the news that drives prices is related to publicly available government issued reports, it is relatively common for large movements to occur in regular cycles.
These price differentials can lead to returns that are far greater than anything available in more traditional venues, and are generally easier to predict through the use of both fundamental and technical indicators. The high level of transparency is especially well-suited to the needs of new traders, who often have less access to the kinds of specialized information that is useful when working with stocks, indices, or commodities.
On the other hand, FX instability is a constant concern, because when the direction of a pair changes, the price reversal can seem nearly instantaneous. The simplest way to reduce risk when trading pairs is to set appropriate limits for when to open and close orders. These are referred to as Stop Loss and Take Profit orders. With a Stop Loss, trades are closed automatically when they hit a certain price or generate a specific level of loss.
With Take Profit orders, you close trades once they created a preset level of profit. Both of these options remove much of the emotional component of trading which is the biggest drain on consistent profitability.
Investors can profit from Forex price movements if they are careful in choosing a diverse portfolio. Low fees and a wide range of assets provide an environment which encourages success.
Foreign currency exchange or Forex offers investors a convenient way to earn a profit from market movements. While many people are aware of the rise and fall of the stock market, or that the price of Gold seems to go up and down on a regular basis, fewer keep track of the shifting value of units of currency relative to each other.
Understanding the relationship between different Forex pairs will improve your chances of making a profit on an ongoing basis.
FX trading was first used by banks to make international commerce easier. As travel became more commonplace, large financial institutions needed a way to get rid of any foreign currency that their clients had brought to them.
In order to exchange one currency for another, the banks needed to agree on relative values: how much of one currency would it take to buy another currency. Because these values were updated frequently, eventually first banks, and then outside investors, realized that you could buy a currency at one price, and then sell it later at a different price for a profit.
It took the rise of the internet to make this opportunity available to traders from outside of the world of high finance. Specialized brokerages emerged in the ‘90s, which developed software that pooled orders from thousands of people and connected them with banks offering to buy and sell different currencies and lower rates.
Depending on the broker you choose, you can now exchange hundreds of currencies 24 hours a day, between when the market opens for business on Sunday evening, until when it closes for the week on Friday evening. However, most orders involve one of four currency pairs: EUR/USD, USD/JPY, GBP/USD, or USD/CHF.
When you decide to become a currency trader, your first step will be to create an account with a broker. You will be given access to a platform where you can make deposits and select pairs to buy and sell.
A reputable company will ask you to verify your identity and source of income, to prevent fraud and money laundering. You can then study the markets to determine which currencies are likely to experience volatility, which creates large price shifts for traders to exploit.
Forex is a unique chance to turn your knowledge of financial events into profit. Once you can see the relationship between the world’s major economies and their underlying money systems, placing orders will no longer seem complicated. We recommend that you learn more about investing in currencies by exploring a respected platform.
Many people are investigating the potential of CFDs as a way to earn money. One of the best advantages of Forex trading is that it allows you to avoid the high commission fees charged by agents who work with traditional stocks and commodities. However, most investors will still need the services of a reputable broker who can supply a connection with the liquidity providers who offer currency pair pricing. Traders are often curious about how these brokers profit from the order process.
First, let’s review how currency pair orders are created. Investors choose two currencies, and then decide which one of the two is most likely to go up, and which one is likely to go down. To open a trade, the investor buys lots (generally between 1,000 and 100,000 units) of the currency that he believes will be more successful.
To close the trade, the investor must eventually sell the same number of lots of that currency. However, when a trade is opened there is always a difference between the buy price of a currency and its selling price. That difference is called “the spread”.
The spread exists because the selling price of a currency at any given time is usually lower than the buying price. This means that you need to have the currency move more than that difference before you see any profits from that order. The most common way for brokers to make money is through the spread.
There are two main types of trading models that brokers choose: straight-through processing and the dealing desk. Let’s look at how both options can affect traders.
With straight-through processing (STP), the brokerage simply finds currency pairs to buy and sell, and gives the rates that they find to the trader. They charge a small fee for the service of finding prices. On the other hand, dealing desk brokers, or market makers, match buyers and sellers, or function as a seller directly.
Dealing desk brokers typically earn a small amount from each client that they match, and the can also make money from the spread.
While it may seem that STP trading would lead to lower spreads, the broker needs to make money somehow. This can sometimes mean that liquidity providers with higher prices might pay them a bonus to bump up their ranking. This type of company also does not offer flexibility during periods of high volatility.
This can weaken risk management strategies such as stop/loss orders, which rely on a set price being available in order to go into effect. Traders have suffered large losses when STP brokers have been unable to provide necessary liquidity.
On the contrary, market makers can use low spreads as a way to entice more buyers into the market, which they can use to match against their existing pool of sellers, in the hopes that they will make more money overall from a higher trading volume.
With this type of model, it is much easier for a trader to find currency pairs at whatever price they desire. Currency pairs are one of the best ways to profit from the relative performance of global economies.