Trader Tips

Trading in the U.S. financial markets

The profession of a trader attracts many people. However, not everyone knows that it has some specifics. So what are the financial markets, and how can you earn money on them?

Stock market

In this direction, traders earn on various trading assets presented by stock exchanges or brokerage companies. Types of trading instruments:

Primary commodities, such as oil or gas;
Commodities such as coffee, wheat, timber;
Securities, such as stocks of different companies or bonds;
Market indices and other assets.

If, for example, a trader chooses securities for his speculative transactions, he needs to know what kinds of stocks there are, their features, yield and other characteristics. The same situation takes place with other trading assets.

Currency market

Most often it is simply called Forex. It works according to the same patterns as the stock market, but only currency pairs are presented here as trading assets. This is the most favorable variant for beginning traders to enter the market. It does not require large financial investments as compared to the stock market. Trading is performed through intermediaries, i.e. brokerage companies, where a client needs to open an account and replenish it. Most brokers do not impose a limit on the minimum deposit, which can be as low as $1 on a cent account.

Binary options can also be attributed to this direction. Although their specifics of trading somewhat different from the above-mentioned markets. Binary contracts have a predetermined yield in the conditions of the trading asset, and a fixed expiration time, which is chosen by the trader.

Cryptocurrency market

Its specifics can also be attributed to the stock or currency markets, as it operates on almost the same patterns. Trading instruments for the trader are tokens such as Ethereum, Bitcoin and other types. As an example, Bitcoin to the U.S. dollar.

Investment Market

There are no traders and no speculation here, and most investors make money on the increasing returns on the instruments. If gold was selected as an investment product, and it increased in value by 30% in 1 year, in this case, the investor will receive a return on the asset. If it, on the contrary, falls in value, then, consequently, it will suffer a loss. Professional investors use portfolios that contain several assets with varying degrees of risk and profitability.

Professionals recommend combining several lines of business in order to increase your income on the financial markets.

Why Forex trading is an ideal business from home

Any beginning entrepreneur is looking for the best opportunity to place their own funds. There are different options, some people open a store, others are passionate about online projects. If you are considering ideas for a business from home, consider Forex trading. Contrary to the beliefs of some people, the international foreign exchange market is not a game, but a job like any other, with its own advantages and pitfalls.

Forex from home is a good opportunity to make profit; in addition, there is no need to rent an office, warehouses, buy transport, goods, hire employees to manage. Someone will say that a store, for example, will bring more profit, so you can pay for premises, taxes and employees’ salaries. Of course, investing $100 in a Forex deposit, you will receive a corresponding income, but when investing the amount required by the other business, the profit will be many times higher than the store will bring. The advantages of Forex trading over other types of financial activity are undeniable.

Business at any time. You can work when it is convenient for you. Forex work does not stop for a minute during a five-day work week. Neither the stock market nor any other type of business where you have to work strictly during traditional «working hours» can provide this. In the currency market you can make a deal even late at night.
Scale. This is the largest market in the world, the size and scope of which no other financial market can match. Anyone at any time can trade currencies and make a profit.
Minimal start up costs. Many people dream of their own business for years, but have no start-up capital. You do not need more than $100 to get started in Forex. This money can be raised quickly enough, without much damage to the family budget.
The foreign exchange market is no different from other economic sectors, a store, a construction firm, a beauty salon, a restaurant, etc. can become unprofitable. In all business spheres the situation is changing all the time, highly profitable niches appear and disappear. Like any business, trading is a risky process which can not only «make money» but also cause losses.

What can hinder success?

Making investment decisions contrary to logic and sober calculation, but on emotions. Many Forex beginners get sucked in and, seeing the excellent prospects, they can’t stop in time. You have to set limits and control your emotions in order not to lose money.
Lack of knowledge. You don’t need a special education, but no one can achieve success without knowing the rules. Education is a must. And to succeed it is not enough to study the Forex dictionary, you need to take a special course, offered by almost all companies, which you can read by looking at the rating of Forex brokers. Also, it wouldn’t hurt to attend seminars, study literature written by world-renowned traders, articles on the basics of Forex trading will also help.
Beginners do not need to trade very often. Although the broker will not charge you a commission, you will pay the spread, that is, the difference between the bid and ask prices. A lot of trades = a lot of spread. You can trade often, but make sure you understand the operation and its consequences before you do it.

Experienced traders recommend newcomers to the currency market from the very beginning to determine the key aspects of the future trade. You should not trust those who promise you the mountain of gold, but you should not be pessimistic either. You must immediately develop your individual style of work, and in the future strictly adhere to the pre-selected plan. The more precisely you organize your trading activities, the easier it will be to control your successful trades and blunders, correct mistakes and achieve new goals in the future. You should also choose a reliable Forex broker.

The main parameters of choosing a reliable Forex broker

There is a competitive struggle between Forex brokers, they provide a lot of options and extensive functionality. But choosing the right broker is a difficult task for beginners and experienced traders alike. There are basic criteria such as major regulators and capitalization, indicating a broker’s credibility and reputation. These parameters can be measured by specific criteria.

But most importantly, when choosing a Forex broker, it is necessary to clearly understand what characteristics a particular trader is interested in. Taking into consideration the needs and style of trading, every trader can find both suitable parameters and possibly unfinished functionality in a broker. You can visit the website of every broker and get acquainted with it in details in order to estimate the possibilities and to understand whether the broker is suitable or not.

Criteria for choosing a reliable Forex broker

When choosing a broker, you should consider the following parameters:

the direction of operation of the Forex broker, regulators;
reliability of the trading platform — the most important criterion, compared to the interface and usability;
capitalization;
the status of the company — broker or dealer;
technical support for the clients;
costs: structure of payments and commissions;
types of accounts;
availability of additional services;
peculiarities of calculation of leverage and margin calls.

Before choosing a broker, traders should thoroughly familiarize themselves with the main parameters of brokers, read reviews.

Peculiarities of broker’s reliability estimation

One of the most important criteria is how a Forex broker is regulated and in what country. Not all countries regulate trading in the same way, there are different specifics and regulations for registration. Beginners and experienced traders should choose the Forex broker with registration in the country where the functioning is controlled by the specialized agency. It is also worth finding out whether the company is regulated offshore or not, because in the first case the registration requirements are more liberal.

The list of states with strict regulatory conditions includes: USA, UK, European Union, Japan, Australia, Switzerland. Traders need to know how a broker is regulated, to have a full understanding of the regulator of trading.

Traders need quick access to real time charts and ratings, news and financial information. These characteristics and additional services should be considered by trader in the context of broker’s package offer, they should not become a defining criterion when choosing a broker.