Forex Online

If you are as confused as I was when I started trading currency on the foreign exchange (forex), than this article will do wonders for you. From facts on the forex to the best online forex trading platform, your questions will be answered.

If you are as confused as I was when I started trading currency on the foreign exchange (forex), than this article will do wonders for you. From facts on the forex to the best online forex trading platform, your questions will be answered.

Ok, let's go over some of the basics. What is the forex? Well, forex, the word is simply a combination of the phrase FOReign Exchange. That's it, you're ready to trade. Oh, you want more? The forex market is an electronic market where the currency of different countries are traded.

In actuality, you are trading the value of currency A vs. the value of currency B. Although you can combine any two currencies to form a currency pair, there are four currency pairs that are considered the major pairs.

They are: EUR/USD (Euro/Dollar), GBP/USD (Pound/Dollar), USD/JPY (Dollar/Yen), USD/CHF (Dollar/Franc). You can spend your entire currency trading career trading just one of those pairs.

Now for some interesting facts about the foreign exchange (forex) market. It is over 30 times as large as any other financial market. Remember this fact, we will be touching on it again later. The forex market is open 24 hours a day 5 days a week. This is a great feature as it allows you to partake in the business of currency trading regardless of where in the world you are.

Back to the size of the forex for a second. Due to this attribute, the foreign exchange market provides currency traders with opportunities that do not exist on any other trading tool. Although this article is not being written to get into too much detail about this, I'll give you an example. There is no slippage on Stop orders during regular trading hours. If you are not sure what this means, I strongly suggest you spend some time looking it up. This is a quality that, by itself, separates the forex from all other markets.

So, now we get to the nuts and bolts of this article. What is an online forex trading platform?

Truth is, whether you are doing your own trading, following some form of forex trading alert or any other sort of forex trading system you are going to need an online forex trading platform.

Regardless of which forex broker you choose, you will be provided with some form of online forex trading platform. Usually, the trading platform will be the same whether you are trading mini contracts or full contracts.

What should an online forex trading platform provide?

Firstly, you should be able to see the value of your account at a quick glance. Also, you should be able to see how much money you have in the market and in what currency pair at any given time.

Secondly, the value of all currency pairs of interest to you should be right at your fingertips. This means that you should be able to define which currency pairs you want to have access to and you should be able to choose the look and feel of the quotes.

Thirdly, an order entering system should be easy to find and easy to use so that you can make quick reactions when you see an opportunity present itself. When you see a 20 pip reward and a 10 pip risk trade, you don't want to be fumbling around with your mouse or keyboard, you just want to trade.

In a very small nutshell, that's it. Those are the three things that an online forex trading platform needs to offer. If you have those than currency trading on the foreign exchange (forex) is only a few clicks away.

Now go make some money. Good trading to you all and good luck.

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Stock Market

Do You Know Stock?

A share of stock represents a part of the equity capital of a publicly held company. This means that a private company decided to allow the public to be part owners of the firm and sold shares of ownership through a stock offering. If a company has one million shares of outstanding stock, then owning one share means that you own one-millionth of that company. So why would a company "sell out" to the public?
Usually because the company has plans (and needs money) for growth and expansion, and its bankers feel that borrowing the money might create too heavy a debt burden. The company looks for "investors" to finance this growth and taps the public markets for these funds.

Another reason for selling stock is that the founders of the company may want to realize some of their investment without selling the entire firm. Bill Gates, the founder of Microsoft, took his company "public" in the 1980s for this very reason. A unique aspect of a publicly held company (a company in which the stock is traded on public markets) is that ownership and management of the company are separated. Management, as an agent for the stockholders, is responsible for maximizing the stockholders' share value through the firm's growth and profitability. Yet, one might ask, who is really serving the interests of the stockholders? Management decides everything from the direction of the company to the compensation of the top executives.

How does the shareholder have any voice in the process? The board of directors acts as the voice of the shareholders and conducts meetings to ensure that the interests of the shareholders are being met. Shareholders usually have the right to elect board members. Each shareholder is entitled to his or her proportionate share of all the earnings — or the profits — generated by the company. This is where the stock gets its true value. As a shareholder in that firm, you are entitled to a proportional share of this and all future years' earnings (after paying interest to the bondholders). However, these earnings may or may not be distributed to shareholders as dividends. Periodically, the board convenes to decide how much of the earnings will be paid to shareholders as dividends and how much will be retained by the company to finance future growth. This is a critical decision that reflects a careful balancing act between the present cash needs of the shareholders and the future potential of the company. For instance, had McDonald's paid out all its earnings in dividends in the early 1960s, its shareholders might well have sacrificed that company's enormous growth.

One of the advantages of owning stock is the ease of trading it. After glancing at the newspaper, you can call a broker or connect to an electronic trading account on the Internet, and instantly buy or sell most stocks listed on the organized exchanges. Note, however, that you are not buying stock from the company, but from another owner of the shares who has decided to sell. When a company first brings its shares to the market, this is an initial public offering (IPO), or "new issue." Immediately after the initial public offering, shares begin trading on the exchanges as investors call their brokers to buy or sell.

Making Money in the Market

By now you should sense that the major factor in stock prices is the earnings potential -- or profitability -- of a company. The value of a company, and hence a share of its stock, is equivalent to today's assessment of the value of all future earnings paid out by that company. The stock market is an auction where prospective buyers of stock, represented by brokers, meet with the sellers of stock, represented by other brokers, to agree on the price. If a company were to announce a major advancement, one that could double the earnings of the company in the future, a seller of stock would certainly expect a higher price than before the announcement. The buyer, on the other hand, would be willing to pay a higher price. Thus, we would expect to see the price of a share of stock climb immediately after a major announcement of this sort. Conversely, if a company announces bad news, we would expect the stock price to fall.

So, the fundamental cause for stock price fluctuations is the changing projection of future earnings. In addition, all things being equal, falling interest rates cause stock prices to go up, and rising interest rates cause stock prices to fall.

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