The Risks Of Online Forex Trading When Using Margin Accounts

By John Eather

There are many benefits to using margin accounts when participating in online forex trading to make a profit. However, there are also associated risks! Because the potential to make profits has been increased it has to be understood that so have the potential for losses. The trader has to be very careful in order to endure that their entire margin account is not wiped out.

If your margin account stands at a leverage ratio of 100:1 or 1% on a lot unit of $100 000, even a one cent move of a currency in the wrong direction will see this deposit completely wiped out. Essentially this means you lose $1 000!There are methods and safeguards in place that will limit these losses, for instance "stop loss orders". These will automatically close your position if the currency drops below a certain point. They will allow traders to limit losses, while still allowing potential profit to be earned.

Safeguards can be put in place to prevent this from happening, and these are called "stop loss orders". Stop loss orders will mean that your account automatically closes the transaction when the currency you are trading falls to a certain low. These stop loss orders can limit losses, while allowing for profitable trading

One of the problems which is often overlooks by foreign currency traders is the broker, on seeing a currency drop may intervene and counteract your transaction. They see your deposit margin account is falling low because of a shift in currency, and they may close it. If you are riding out a downturn, expecting the trend to change and your broker closes your position you will lose your deposit funds. In order to continue riding this downturn until the shift to an upwards trend occurs; you will be required to make an additional deposit into your margin account.

As we said previously, there are both large risks and large rewards in online forex trading. Professional people are seeing the benefit in trading and are leaving traditional professions to become traders. They need to understand that it is vital to know what they are doing in order to ensure success. Stop loss orders are not the only way to protect your investment in this market. Knowledge is vital! It is important to know how to read market trends and traits, and understand how both profits and losses are made. - 23221

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Want to find out more about online forex trading, then visit John Eather's site on how to choose the best forex trading robot for your needs.

The Basics of Soaring Gold Costs

By Jason Mixner

What are the reasons behind the high gold costs we are witnessing? Why do certain assets rise to astonishing highs when the basics remain low? In the past twelve months gold has risen to $1,007 per ounce, which is its highest point between March, 2008 and now. Gold has seen a 12% increase in the intervening months.

How has this happened? It certainly hasn't been the fundamentals, which is what you would think would cause it. The demand for gold jewelry has dropped 22% since 2008 according to the World Gold Council, and the use of gold has dropped 21% in industrial processes. The only part of the gold market that has flourished was the speculation, which saw an increase of 46% earlier in the year.

In addition, gold is thought to be a way to fight inflation, which is why a lot of people are drawn to this commodity. However, when looking at specific data published by the Department of Labor, the Gold Consumer Price Index dropped by 2.1% in twelve months. This indicates that inflation has not occurred. You might be wondering what people are worried about then.

Because the Federal balance sheet is getting larger, the currency it is based on is losing it's value. Deflation will only cause our currency to further lose it's value, and inflation is not a pleasant option; it appears that either way things go, gold will benefit.

Another factor in support of gold is how low the current US interest rates are. The method by which banks charge other banks for loans, known as the London interbank dollar rate, has fallen 4.8% since October of last year to an unprecedented 0.314%. Because you do not earn interest by having gold, you have something known as an opportunity cost which you do not have with any other form of investment, such as bonds. However, given the current value of the dollar, the opportunity cost of having gold as opposed to bonds is insignificant.

What this means is that the fundamentals have absolutely nothing to do with the high price of gold; it is dependent solely upon financial speculation. This means that there is absolutely no way to know what is going to happen to the price of gold in the future. - 23221

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Understanding Concept Of Foreign Exchange Trading

By John Eather

Trading nothing: When you trade with currencies you are actually trading with nothing as there is no physical exchange with trade mainly conducted by means of computer entries and automatically netted depending on market price. This market type is used purely for buying and selling-no long term investing. The purpose of the market is to help conversion of currencies for international trading corporations who have to constantly trade currencies.

Main difference: The main difference between foreign currencies markets and other markets such as futures, options and stocks is that currencies are traded over-the-counter without strict regulation while futures, options and stocks are traded on very strictly regulated, formal exchanges. Trading members only make use of a mere credit agreement to bind members as no clearing houses used thus there are no guarantee of payment of delivery.

Traded currency's: Majority of trades are done in the most liquid currencies pair worldwide which are Euro/US Dollar, British Pound/US Dollar, Dollar/Yen and US Dollar/Swiss Franc. The most popular currency variation pairs are Australian Dollar/US Dollar, New Zealand Dollar and US Dollar/Canadian Dollar. Exotic currencies such as Czech Koruna can also be traded.

Secretive terms: As with other professions, currency traders are proud owners of special gibberish terms to refer to market items or events for example Yards are one billion units, Swissie is Swiss Franc's, a figure is a round number and sterling is a British Pound.

Movement terms: The term "tick" is a small time lapse between to currencies specifically trade time lapses. "Pips" are small movements in currency pricing. Pips are used to determine how much or little gain has been made. Just a couple of pips can result extreme price fluctuations. The size account determines the pip value. The pip difference between bid and asking price is known as spread. - 23221

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Want to find out more about foreign exchange trading, then visit John Eather's site on how to choose the best forex trading robot for your needs.

Online Forex Trade And The Various Strategies

By John Eather

Are you familiar with the stock market and do you know about all the ins and outs of trading stocks? Are you now getting a bit board of the whole thing, you might feel that it is time for a new look? You could find yourself online searching the internet tirelessly, day in and day out, or you might think to ask around trying to find out how you neighbor does it, or you could just get smart and pick up the new trend, follow what the rest of the world is doing and start doing online Forex trade.

Originally Forex trading was used in larger companies and between huge businesses and organizations that could afford the Foreign Exchange, however, these days, easily accessible training systems, the internet, and Forex charts are obtainable for everyone to see and to use.

Your online Forex trade will include knowing when to buy your money, when to sell your money and when to move your money to a different currency.

Forex trading strategies cannot be learned overnight and it is for this reason that you can opt to do a trial period to see how you like doing online Forex trade. There are so many terms and little rules to learn, so it might be wise to also do a Forex training course which will explain it all, including more about online forex trade.

Why should to get a broker? It is a good idea to always have a forex broker at your disposal, because when certain things happen or trends and patterns are seen in the market, your forex broker will be able to inform you of it and you can choose what to do next.

However, as the online Forex trade markets change every minute, you can choose to get a forex online package for your trading. This will automatically let you know of any fluctuation either via your email or your cell phone, which will enable you to act quickly. - 23221

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Looking to find the best deal on online forex trade, then visit www.MoneyMakingFxTrader.com to find the best advice on automated forex trading for you.

Discover Sugar Commodity Trading, Follow Sugar Commodity Prices

By Marianna Gomes

Traders looking at sugar commodity trading as a way to gain exposure to commodities as an asset class have some great opportunities, particularly with global agricultural prices looking set for long term increases. In the early 1970's sugar prices surged over 60 cents a pound and by over 40 cents a pound in the early 1980's at the tail end of the 1970's commodity bull market. Following the adverse impact of the global economic crisis in 2008, commodities in general and sugar commodity prices in particular are advancing strongly again, with sugar prices are at their highest for 28 years.

There are numerous cases of serious sugar shortages as desperate consumers across Asia queue for small quantities of this key commodity. To think that while in 2007 India was a major exporter of sugar, with a surplus of five million tons, but from 2009 the country is a net importer. So what has caused this serious imbalance between world sugar demand and supply? After the shock of the global economic crisis, the US dollar is falling against other currencies and hopes of a strong rebound are causing real asset prices to be driven higher. Add in the weak monsoon season in India and very unhelpful weather for sugar plantations in Brazil, impacting adversely on sugar yields, and the result is raw sugar prices heading for a high of 25 cents a pound.

Preparing for your sugar commodity trading analysis, find out where sugar comes from, in what forms and consider the recent phenomenon that threatens to change the dynamics of global sugar commodity markets in future. Between 75-80% of sugar comes from sugarcane, produced in over 100 countries globally, largely from the tropical and sub-tropical areas of the southern hemisphere. Rainfall is important for successful crop yields, with ideally around 600 mm needed annually. In addition to bad weather, crop infestation due to pests is another variable causing a rise in sugar prices on world commodity exchanges.

Leading the pack of top producing nations is Brazil, also the largest global exporter, followed by India, China, the EU, USA and Australia. A major distorting factor in world sugar markets is subsidy regimes in the US and Europe, as they artificially drive prices higher than the world sugar price. In addition to its traditional uses in bread fermentation and in fruit and vegetable products, sugar is now increasingly used as a source of ethanol fuel.

Balance between supply was quite tight in 2007 and seems almost certain to remain or worsen as demand is projected to grow in developing Asian nations, particularly the BRIC nations like China and India. India is the largest consumer in the world and it is growing its use of sugar for ethanol as an alternative fuel. China is the world's third largest consumer and producer, with its per capita sugar consumption increasing from a very low base of around 7kg per annum (US per capita consumption of 45kg per annum).

You will help your sugar commodity trading strategy by getting to know about the Brazilian market, the largest world producer. This country's strategy is to avoid a sugar glut by taking any surplus sugarcane crop to produce ethanol for biodiesel for export and domestic consumption. More sugar is being channelled for ethanol as crude oil prices rise, along with sugar demand surges in China. There are major challenges for sugar producers going forward, given the likely high crude oil prices in future coupled with growing demand, seeing sugar prices remaining high.

With your chosen commodity trading system and advice from your professional financial adviser, you can trade from almost anywhere in the world with good internet access. #11 Raw sugar futures is the most heavily traded sugar futures contract in the world, available on the ICE US Futures platform as is the #16 Sugar futures contract. Alternatively, you can trade raw sugar futures on LIFFE CONNECT, the trading platform of LIFFE, part of the NYSE Euronext Group. Also look at soft commodity indexes using an ETF which may not involve taking a leveraged position. With the growth in bio ethanol demand and sugar consumption in the BRIC economies, prospects for sugar prices and sugar commodity trading look very exciting in the years ahead. - 23221

About the Author:

Covering soft commodities, the author, Marianna Gomes, pens articles for the Commodity Trading Today website, a practical informational resource. Discover more about how you could benefit from sugar commodity trading suggestions here.