Overview of Online Trading Products: Forex & Indices
TheglobalCOVID-19pandemichashelpedattractanewaudiencetotheretailForex market.Manyinstitutionsviewthecoronaviruspandemicasthemostseriousparadigm shiftsinceWorldWarII.Manypeoplelosttheirjobs.Manybusinesseshavecloseddueto blockages.Asthelargestfinancialmarketintheworld,Forexhasreceivedsignificantnew demographicattentioninaneraofuncertainty,lossandopportunity.Peoplewhodidn’t knowmuchabouttheForexmarketareflockingin.StandintheForexretailstore.
Forex trading aroundtheworldisgrowingrapidly.Fortraders,thiscanbeawelcome signal.ForexbrokersandbankshavemanyreasonstoexpandForexglobally.Forextrading israpidlyexpandingduetoitsconvenienceandaffordability.Inthisarticle,youcansee someofthereasonswhyForexisbecomingmoreandmorepopularallovertheworld.
TheForexmarketisoneofthemostexcitingmarketstotradein,andForextradersdo differentthingseveryday.Tradersmustanalyzethecurrencydataofeachpairtheywishto tradebeforeopeningaposition.Thisincludesgeneralsentimentcombinedwithtechnical analysissuchaschartpatternsormomentumindicators.Whenitcomestimetotrade,a forexbrokercanhandleitforyou,butsomepeoplechoosetoexecutetheirorders manuallyusingaplatformlikeMetaTrader(MT).Otherjobsmaybeinvolvedifyouare workingonaninternationalteam.Coordinatingupdatesbetweenforextradersandforex brokersindifferenttimezones,requestingassistancewithstrategiesorreceivingrequests fromforexclientsexecutingtrades.Ingeneral,Forexpairscanbedividedintothree categories:Majorcurrencies,commoditycurrenciesandcrosscurrencies.
Majorcurrenciesarethemosttradedcurrenciesonthemarket.Opinionsdifferonthe numberofmajorcurrencypairsthatexist,butmostlistingsincludeEUR/USD,USD/JPY, GBP/USDandUSD/CHF.
Commoditycurrenciesarecurrencypairswhosevalueiscloselyrelatedtocommodities suchasoil,coalorironore.CommoditycurrenciesincludedinthislistareAUD/USDand USD/CAD.
AcrosscurrencyisacurrencypairthatdoesnotincludetheUSdollar.Thetop10includes twocross-currencypairs:EUR/GBPandEUR/JPY.
SimilarlyonecanalsotradeinIndices.Indextradinggivesyouaccesstotheentire economyorsectoratonceandrequireonlyonepositiontobeopened.Youcanspeculate ontheriseorfallofanindexpricewithoutowningtheunderlyingCFDasset.Moststock indicesarecalculatedbasedonthemarketcapitalizationofmembercompanies.This methodgivesmoreweighttohigh-valuecompanies,whichmeansthattheresultshavea greaterimpactontheindexvaluethanlow-endcompanies.However,somepopular indices,includingtheDowJonesIndustrialAverage(DJIA),areweighted.Thismethod givesmoreweighttocompanieswithhigherstockprices,sochangesintheirvalueshavea greaterimpactonthecurrentpriceoftheindex.
The most traded indices:
·DJIA(WallStreet) Measuresthefvalueofthetop30USblue-chipstocks.
·DAX(Germany40) trackstheperformanceofthetop40companieslistedonthe FrankfurtStockExchange.
·NASDAQ100(USTech100) Reportsthemarketvalueofthetop100USnon-financial companies.
·FTSE100 measurestheperformanceof100bluechipslistedontheLondonStock Exchange.
·S&P500($500) Tracksthevalueofthe500largestcompaniesintheUnitedStates.
Understanding the Risk Involvement in Online trading products
Now,onceyouentertheWorldWideWeb,yourriskcanbecompletelyoutofcontrol,in partbecauseofthespeedatwhichtransactionscantakeplace.Infact,thespeedoftrading, instantgratification,andanadrenalinerushtomakeaprofitinlessthan60secondscan oftentriggeragaminginstinctthatmanytraderssuccumbto.Therefore,theymayturnto onlinetradingasaformofgamblingratherthantradingasaprofessionalbusinessthat requiresgoodspeculationhabits.Asatrader,speculationisnotagameofluck.The differencebetweengamblingandspeculationisriskmanagement.Inotherwords,by speculatingyoucancontrolyourriskinsomeway,butgamblingisnot.Cardgamessuchas pokercanalsobeplayedwiththeplayer’sheartorspeculationmind,andtheresultsare usuallyverydifferent.So,oneshoulddoonlinetradingofForex&Indicesintaking considerationoftheriskinarightwaywiththerightandthe best ECN broker whichhelps youtolearntrading.That’sgiveanextraedgetokeeponeaheadinthegameoftrading.