How To Trade The Forex Markets

The forex markets are often an interesting if not a confusing place to trade

. The Japanese Yen is still seen as the strong man of the major currencies yet that is rather at odds with the countrys fiscal position. Not only that but the Euro/Yen rate is still flirting with the nine year lows around the 108.00 level.

Looking at the Euro/Sterling rate, whilst the currencies continue to fight over the same ground, Sterling does look to be drifting somewhat. In June 2010 we almost hit 1.24, a level not seen since November 2008. We are now trading well under the 1.20 level.

There is one major factor in the UKs favour though and that is that its problems are solvable by itself. The UK can determine economic policy to suit its own needs. Elsewhere Spain, Greece, Ireland, Italy etc are stuck in a monetary straightjacket that is controlled by the stronger European economies of Germany, France, Holland etc. The future for the weaker economies appears bleak and that in turn should weaken the Euro again.

Investing in the markets can be interesting, even exciting, especially when you consider the profits that you might make. And making a profit is rarely seen as a bad thing. However, it is important to appreciate that you can lose.

If you speculate on the traditional forex markets, or even if you invest via newer products, such as margined-forex or forex spread betting, there are risks. With the latter two options you need to be especially careful because you can lose more than your original stake.

Having said all this, nowadays many investors are turning to the spread betting companies given that they provide a convenient investment option for those who want fast access to the international markets. A clear advantage is that financial spread trading offers a large variety of markets on which an investor can trade, including the forex markets but also stock and shares, indices, gold and crude oil.

Financial spread trading also offers tax efficiency. Because it does not involve the transfer of assets, and you are merely speculating on the future level of a market, profits are not subject to stamp duty, capital gains or income tax*. Also note that it can help to keep your trading costs down. When trading the more traditional forex markets you will normally incur brokers fees and/or commissions. When financial spread trading, your trades do not incur any such fees or commissions.

Before you trade though please read the following risk warning notice which covers some areas that you should consider, "Ensure that spread trading matches your investment objectives. Spread trading carries a high level of risk. Seek independent advice where necessary. Familiarise yourself with the risks".

Take care when trading the financial markets. Remember that using smaller trade sizes is an important risk management technique.

* According to current UK tax law. Tax laws can change from time to time.

by: Daniel Jones

POST COMMENT

Trading The Stock Markets And Reading The Money Supply Data Open Market Operations Fed's Key Tool In Monetary Policy Property Management draw Maximum Profit From Them Caution Required In The Forex Markets Travel Tips - Trips To The German Christmas Markets Ready For The Future? A Guide To Trading Stock Market Futures Dental Website Marketing And How Dental Marketing Is Crucial To Your Practice Reducing Your Risk When Day Trading The Stock Market Unveiling Debt Settlement: How To Avoid Debt Settlement Scams And Find A Reputable Debt Settlement C Another Bear Market Rally Or A Time To Buy Stocks? What Exactly Is Article Marketing Affiliate Marketing Tips - Your Article Marketing Blog Uncover The Benefits Of Article Marketing