Choosing a Forex Broker
For newcomers to the online forex market, choosing a forex broker is a key step to becoming a successful trader. You will want to choose a broker who will be a good fit for you and who has the experience necessary to help you be successful. The choice should be one that will last throughout your trading career. A “good” broker is not necessarily the right broker for every trader. You need to find a broker who will match you in aggressiveness, who is experienced working with the kinds of investments you are wanting to make and that you can afford. Following are some simple steps to follow in the process of finding a forex broker.
Step 1: Research
When seeking a forex broker, there are certain credentials you will want to look for. Be sure to find a broker who is registered with one or more regulating authorities. Brokers in the United States should be affiliated with the National Futures Association (NFA) or the Commodities Futures Trading Commission (CFTC); for brokers in the United Kingdom, look for the Financial Service Authority.
How much or how little leverage does the broker require for a trade? This question is very important to a new trader who does not have a lot of capital to work with. Some brokers will only broker a deal with a substantial investment. If you are a conservative trader or have a slim budget to get started, be sure to seek a broker who will work with what you can afford and will not pressure you to go beyond your limits.
If you plan to hold positions overnight, it will be necessary to find a forex broker who credits or debits daily rollover interest. This is a practice that not all brokers will take part in, and depending on the kind of trading you are hoping to process, this will be a very important point.
Step 2: Compare Brokers
Once you have researched a number of forex brokers, and have narrowed your choice down to the top two or three options, take the time to compare their histories and statistics. There are websites available that will delineate vital information about each broker so you can compare their strengths and weakness, their habits, and their requirements. Use this to rank your choices.
Step 3: Open Demo Accounts and Ask Questions
Demo trading sites are available online. New traders can “practice” without investing money at these sites. It is advisable that you choose two brokers, and open a demo account with each of them. This will give you an opportunity to experience simulations of real trade experiences so that you can ask educated questions and observe each broker as they respond to various situations. The advantage here is twofold: first, you will learn a great deal about the practice of forex trading before investing any real money, and second, you will get to experience each broker’s techniques and reactions in real life scenarios. After this experience, you will likely have chosen your most appropriate forex broker.
Futures Trading…Know The Market Before The Experts
You Don’t need a Crystal Ball
One might say that there has to be some kind of mystical knowledge being used, considering the price for the commodity doesn’t yet exist. Commodities are any physical, tangible goods, such as crops like corn or wheat, to oil, gold, and currency, just to name a few. The futures market has nothing to do with the use of a crystal ball, though there are many traders who wish they had one. A futures contract is a standardized contract to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price (the futures price). The contracts are traded on a futures exchange.
A futures contract gives the holder the obligation to make or take delivery under the terms of the contract, whereas an option grants the buyer the right, but not the obligation, to establish a position previously held by the seller of the option. Like all financial instruments, the futures market is highly regulated, but not by the SEC.
The SEC administers and enforces the federal laws that govern the sale and trading of securities, such as stocks, bonds, and mutual funds, but they do not regulate futures trading. The federal agency that does regulate futures trading is the Commodity Futures Trading Commission. With limited
exceptions, the trading of futures must be executed on the floor of a commodity exchange. Similar to broker-dealers that are members of the National Association of Securities Dealers, Inc. or some other self-regulatory organization, all firms and individuals who trade futures with the public or give advice about futures trading must be registered with the National Futures Association (NFA).
The Players In This Chess Match
Hedgers and Speculators
Commercial hedgers are corporations and sometime individuals, that seek to ensure the stability of a given commodity by taking a position in the commodities market. Take peas for example, and the hedger, a food processor who cans them. If pea prices go up the hedger ends up having to pay the farmer or pea dealer more. Because it is basically a cash commodity, to protect himself against higher pea prices, the processor can “hedge” his risk exposure by buying enough pea futures contracts to cover the amount of peas he expects to buy. Since cash and futures prices do tend to move in tandem, the futures position will profit if the price of peas rise enough to offset cash pea losses.
Speculators are the second major group of futures players. These participants include independent floor traders and investors. A speculator is a person, or more likely an institution, that purchases or sells the commodities based on factors other than simply analysis. Whereas investors will focus, by and large, on detailed analysis.
Gambling With Your Futures
Five Reasons To Roll the Dice
Since most individual traders are speculators, here is a list of some of the advantages and disadvantages of the futures market over other investment possibilities.
1. The possibility exist that a person can make more money faster in the futures market, because the speed of prices tend to change faster than stocks. Conversely, bad judgment can cause one to suffer greater losses than traditional investments.
2. Futures are highly leveraged investments. The trader only puts up about 15-20% as a margin, yet still being able to ride the full amount of the contract. Unlike stocks where at least 50% of its value has to be put up, and the investor pays interest on the difference between the margin and the full contract value.
3. For the most part there is no inside trading. Everyone has the same insiders information on the weather, for example. This is an open outcry market, very public, which insures a fair outcome.
4. Commission charges on futures trades are small compared to other investments, and the investor pays them after the position is liquidated.
5. Most commodity markets are very broad and liquid. Transactions can be completed quickly, lowering the risk of adverse market moves between the time of the decision to trade and the trade’s execution.
I hope this has helped in your research. I don’t profess to being an expert, but I do know of some. I obviously don’t have the time to go into all the details now, but at my site Market Mentalist you will find all you need to know about investing online. I have a page devoted to futures. There is access to some of the top trading systems available including software, books, newsletters, and Forums. Whether you are an inquisitive novice or a seasoned pro Market Mentalist offers the online investment resource you just might be seeking.
At 57, I consider myself to be a Jack Of All Trades And Master Of Nothing. I was a struggling actor for 25 years. During that time I learned a little about a lot of things, and would like to pass along some of that knowledge. I live in California with my beautiful wife and a menagerie of pets.
Online Futures Trading Methods
Crystal Ball, Anyone?
One might say that there has to be some kind of mystical knowledge being used, considering the price for the commodity doesn’t yet exist. Commodities are any physical, tangible goods, such as crops like corn or wheat, to oil, gold, and currency, just to name a few. The futures market has nothing to do with the use of a crystal ball, though there are many traders who wish they had one. A futures contract is a standardized contract to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price (the futures price). The contracts are traded on a futures exchange.
A futures contract gives the holder the obligation to make or take delivery under the terms of the contract, whereas an option grants the buyer the right, but not the obligation, to establish a position previously held by the seller of the option. Like all financial instruments, the futures market is highly regulated, but not by the SEC.
The SEC administers and enforces the federal laws that govern the sale and trading of securities, such as stocks, bonds, and mutual funds, but they do not regulate futures trading. The federal agency that does regulate futures trading is the Commodity Futures Trading Commission. With limited
exceptions, the trading of futures must be executed on the floor of a commodity exchange. Similar to broker-dealers that are members of the National Association of Securities Dealers, Inc. or some other self-regulatory organization, all firms and individuals who trade futures with the public or give advice about futures trading must be registered with the National Futures Association (NFA).
Today, with online futures trading, we have instantaneous results which provide greater benefits for the trader. This of course results in worldwide access. Before we address possible methods, we must first recognize the players in this high stakes game of commodities.
Hedgers and Speculators
Commercial hedgers are corporations and sometime individuals, which seek to ensure the stability of a given commodity by taking a position in the commodities market. Take peas for example, and the hedger, a food processor who cans them. If pea prices go up the hedger ends up having to pay the farmer or pea dealer more. Because it is basically a cash commodity, to protect himself against higher pea prices, the processor can “hedge” his risk exposure by buying enough pea futures contracts to cover the amount of peas he expects to buy. Since cash and futures prices do tend to move in tandem, the futures position will profit if the price of peas rises enough to offset cash pea losses.
Speculators are the second major group of futures players. These participants include independent floor traders and investors. A speculator is a person, or more likely an institution, that purchases or sells the commodities based on factors other than simply analysis. Whereas investors will focus, by and large, on detailed analysis.
Method to the Madness
Since most individual traders are speculators, here is a list of some of the advantages and disadvantages of the futures market over other investment possibilities.
1. The possibilities exist that a person can make more money faster in the futures market, because the speed of prices tends to change faster than stocks. Conversely, bad judgment can cause one to suffer greater losses than traditional investments.
2. Futures are highly leveraged investments. The trader only puts up about 15-20% as a margin, yet still being able to ride the full amount of the contract. Unlike stocks where at least 50% of its value has to be put up, and the investor pays interest on the difference between the margin and the full contract value.
3. For the most part there is no inside trading. Everyone has the same insider’s information on the weather, for example. This is an open outcry market, very public, which insures a fair outcome.
4. Commission charges on futures trades are small compared to other investments, and the investor pays them after the position is liquidated.
5. Most commodity markets are very broad and liquid. Transactions can be completed quickly, lowering the risk of adverse market moves between the time of the decision to trade and the trade’s execution.
I hope this has helped in your research. I don’t profess to being an expert, but I do know of some. I obviously don’t have the time to go into all the details now, but at my site Market Mentalist you will find all you need to know about investing online. I have a page devoted to Online Futures Trading Methods. There is access to some of the top trading systems available including software, books, newsletters, and Forums. Whether you are an inquisitive novice or a seasoned pro Market Mentalist offers the online investment resource you just might be seeking.
Now in my late 50′s, I consider myself to be a Jack Of All Trades And Master Of a few things. I was a struggling actor for 25 years. During that time I learned a little about a lot of things, and would like to pass along some of that knowledge. As an experienced trader, I can tell you that this the time to take advantage of the market and Online Futures Trading Methods
Debunking The Myth of Managed Futures
With the lackluster returns in the equity markets, many investors are looking for alternatives for their investment dollars, one of the sectors attracting a lot of interest is the futures markets or commodity markets.
Many of these new investors in the futures markets are looking for someone experienced. They are looking for someone with an established track record to handle the trading decisions of their personal account. In the world of futures, these money managers are referred to as Commodity Trading Advisors or CTAs. Many investors wrongly assume that they do not qualify to have a CTA manage their personal futures account, I will attempt to clarify some of these misconceptions.
Reasons for this common misconception include: - Investors do not know that managed futures with a documented track record exist for individual investors - Investors assume that they would not qualify because of high initial account sizes - Investors have heard the horror stories of a truck showing up at someones front door with a delivery of 5,000 bushels of Corn
Managed Futures has been an investment class that has historically been available to institutions and high net worth individuals, like everything this is changing. The track records and performance information for managed futures remains difficult to find for the average investor. While individual investors might assume that they would not meet the criteria of participating in a managed futures program, this is not always the case. Many managed futures programs have lower requirements than most would expect bringing managed futures as an asset class to the mainstream investor.
These managed futures programs have documented track records and the managers are required to be registered with both the NFA (National Futures Association) as well as the CFTC (Commodity Futures Trading Commission). All managers are required to provide potential clients with a disclosure document that covers the risks as well as the historical performance for their programs. Client accounts are established with a broker that introduces the account to the Manager.
Many investors wrongly assume that they do not qualify for a managed futures account because they assume that they need to meet high initial account balances in order to participate in these programs, this is just not true. Currently we offer a variety of managed futures programs. You might be surprised to learn that you can open a managed futures account with as little as $35,000.
The different managed futures programs that we offer are programs that have shown consistent positive returns with historically low volatility that are managed by proven Commodity Trading Advisors. While we understand that there are many investors and traders that are looking for triple digit yearly returns, experience has taught us that most investors are not looking for the flash in the pan program that shows high volatility but are more comfortable with a consistent return with lower volatility. One of the benefits of investing with a managed futures program is that the performance of the program does not depend on the direction of anyone particular market. Managed Futures have shown to have a low correlation with stock markets. These programs are not dependent on the market direction to provide returns.
Many have heard the old story of I knew someone that had to take delivery of corn and a truck showed up at his front yard with 5,000 bushels of corn this is just not true. A futures contract represents the obligation to either buy or sell a commodity of a certain class at a certain time in the future (why they are called futures), it is the duty of the Commodity Trading Advisor to remove this risk from their trading program. Traders should remember that over 90% of futures contracts never go to delivery they are offset in the market. The process of delivery usually only happens to a trader that is new and unfamiliar with the markets and is trading alone. Brokers usually help new traders by making sure that these small but very costly mistakes do not occur.
Author: Les Jones
Article Source: EzineArticles.com
Provided by: Digital Camera Times
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