You Dont Pay Commissions In Forex Trading

You Don't Pay Commissions In Forex Trading
The Foreign Exchange market is​ the​ largest financial market in​ the​ world .​
In the​ US alone, it​ has a​ daily trading volumes of​ $1.2 trillion dollars, which outshines the​ stock, bond, and​ other commodity markets .​
But just what is​ currency trading or​ Forex trading, as​ it​ is​ more commonly known?
Forex trading is​ where you will buy one currency and​ sell another, or​ it​ may be a​ combination of​ a​ few different currencies in​ total .​
Your trading involves matching one currency against another .​
That is, you buy the​ Euro hoping it​ will rise against the​ U.S .​
Dollar .​
Which also means you hope the​ U.S .​
Dollar will fall against the​ value of​ the​ Euro .​
This does not mean you wish the​ U.S .​
Dollar bad tidings, it​ is​ just you are trading using economic information about the​ two currencies .​
You can do the​ same for​ the​ Swiss franc against the​ Japanese yen .​
Most people probably call this form of​ trading speculation .​
But consider that some individuals and​ groups make millions of​ dollars daily using the​ techniques available for​ trading in​ currencies.
You would usually do Forex trading using a​ margin .​
This means you leave a​ small deposit with your broker and​ can trade for​ many times the​ value of​ your deposit .​
For example, let's say you want to​ open a​ trade matching two currencies, and​ you want to​ trade for​ $5,000 .​
You can make a​ deposit of​ $50 with your broker, and​ stand to​ gain much more than the​ $50 after you close the​ trade .​
You benefit from not using your own money but earning a​ tidy profit .​
Of course, you could lose on the​ trade, but your losses, would be no more than your deposit if​ you took the​ necessary precaution to​ exit the​ trade once you reached your margin.
You still need a​ broker as​ you do in​ the​ other markets .​
With Forex, your broker will open an​ account for​ you to​ make your trades .​
Different brokers stipulate different amounts you should deposit to​ your account .​
Some ask for​ just $50 to​ open an​ account, but you wouldn't trade much on such a​ small amount .​
Most brokers set margin at​ 3-5%, so if​ you want to​ open a​ trade for​ $10,000 you will need to​ have on deposit $300-$500 .​
The great thing about Forex trading is​ that you do not pay a​ commission on your trades .​
But don't cry for​ the​ market makers just yet .​
They manage to​ recover their expenses and​ profit on all your trades, by picking up the​ spread between the​ two currencies you trade .​
The spread is​ the​ difference between the​ bid and​ ask prices of​ the​ two currencies.
While you may look at​ Forex trading as​ pure speculation, you have to​ consider that to​ succeed you need to​ understand the​ nature of​ chance as​ it​ applies to​ the​ market .​
You may get up one morning to​ hear the​ U.S .​
Dollar dipped against the​ Euro because exports to​ Europe fell sharply for​ the​ third consecutive quarter .​
If you take this information without doing further research and​ decide to​ trade the​ Euro against the​ U.S .​
Dollar, you are speculating .​
However, you do not have any solid proof the​ dollar will continue to​ fall against the​ Euro .​
Successful traders don't only digest the​ financial news, they also use other tools to​ decide how to​ trade.

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