As we have already said more than once, a private Internet trader enters the market Forex through the internet broker or a dealing company.Internet trader earns money through currency speculation, closing positions in more favorable conditions of the exchange rate than at the opening.For the Internet trader working at Forex - a risky business. Depending on the developed strategy of trading (trading on strategies will be discussed in the section University Forex), the efficiency of the foreign exchange market may be different. An important success factor is the nature of the trader, his ability to control their emotions and make informed decisions.
Services Internet brokers in the Forex market, by contrast, can be called business. In this business, there is practically no risk. The principle of margin trading, as stated in the relevant chapter, does not allow the client dealing company to lose more money than is available in his account and "climb into the pocket of" Internet broker.
We know that the transaction in Forex are made at the interbank level. In dealing company has multicurrency accounts in the bank, where it is served. The bank provides quotes dealing company, and that, in turn, provides quotes to their clients.Typically, these quotes are different - Online traders get a few quotes from the increased size of the spread. It allows dealing company earn on the difference in the spread, because the level of interbank transactions are made at more favorable quotes. Here is an example. Suppose the bank exposes dealing center quotation USD / JPY 104.75 / 104.77 to the size of the spread is 2 points. Dealing center increases the size of the spread to 4 points and provides its customers with a quote USD / JPY 104.74 / 104.78. Suppose Internet trader opens a short position (sell US dollars) in one lot, the amount of which is equal to 100 000 dollars. Internet trader sells dollars at the price of 104.74 yen per dollar, and in fact at the interbank level, the transaction is executed at the price of 104.75 yen per dollar. We get a difference of 100 000 * (107.75 - 104.74) = 1 000 Japanese Yen, which in dollar interbank rate is approximately 1000 / 104.77 = 9.54 US dollar. This amount - a steady income dealing company that is not associated with any risk.It should be noted that this is only the income from the opening position of the client. The same number dealing company makes a closing position.It turns out about 19 dollars in revenue from the deal. If customers have thousands of dealing company, and on the day they make dozens of trades, the daily income of dealing company can make hundreds of thousands of dollars! As you can see, this is a very profitable business.
But the spread can not be the sole source of income for online brokers. Some dealing companies may be subject to the commission for the transaction, or even separate fees for opening and closing positions. In principle, such a commission similar to the income from the spread. For example, in our example, the dealing company can provide customers with a quote interbank USD / JPY 104.75 / 104.77 directly (without increasing the spread), but take the $ 19 from the customer for each transaction. It turns out the same profit. It should be noted that some Internet brokers can and take a commission and increase interbank spread. In fact, check whether dealing company increases the interbank spread or not is difficult, since quotes are constantly changing, and the interbank spread is unknown Internet trader.
The method described above income dealing company holds if the Internet trader in his work on the Forex uses standard size lots. If you are using a mini or micro lots, the situation is somewhat different. A dealing company can not make a deal on such a small amount through the bank at the inter bank level. The size of a mini lot is equivalent to $ 10 000, and a micro lot - 1 000 dollars. The minimum size of the transaction at the inter bank level - $ 100 000. How, then, will make the transaction in this case? It operates a simple statistic - 95% Internet Beginners traders lose their money at work on Forex. Typically, this is because most people are starting to work on Forex, looking for easy money. They do not study thoroughly the theory of the foreign exchange market, the tools of his analysis, the impact of the release of economic indicators on exchange rates. For such people, working at Forex turns into a game of roulette. That's because on the mini and micro lots are working, as a rule, only novice traders and amateurs, the dealing company transactions on such lots at the inter bank level does not enter. If the Internet trader closes the position for a mini or micro lot with losses, such losses are dealing company receives as profit. If the Internet trader closes the position for a mini or micro lot with a profit, the profit is paid to the dealing company. Since 95% of new traders will sooner or later lose their money, the remaining 5%, to destroy dealing company, you need to make a profit greater than the loss of the 95% most hunters for good luck. Assuming that the initial size of the account is the same for each trader, this profit should increase by 19 times, and the probability of this is negligible. Furthermore, if the Internet is a very successful trader working on a mini lots, then soon it goes to standard lots, where dealing company does not pay him an income of "own pocket", and performs operations by the bank at the inter bank level.
The above-described alternative way of earning is not advertised dealing companies.Most of them claims that all transactions are made at the interbank level, regardless of the size of the lots. But common sense and logical reasoning leads to the opposite. Perhaps the truth is somewhere in between. Everyone decides for himself what to believe and what not. But understand that most new traders lose their money is very important. Earn Forex can be, and is not a myth. But this is not enough to click on the button "make a million". Work on the Forex - a risky business, requiring Internet trader certain knowledge and skills.
An additional source of income for dealing company can become a bank interest, as described in the previous chapter. But revenues from it, as a rule, are insignificant, and to get them open position should not be closed for a long time. Online broker is much more advantageous if the positions are opened and closed Internet traders as often as possible. Indeed, as described above, each transaction is bringing Internet broker income in the form of commission or by the spread. Revenue from bank interest compared with revenues from commissions and spreads are negligible. It should be noted that dealing companies can not only earn interest on the bank, but also to pay him, and this was discussed in detail in the previous chapter.
As we can see, dealing companies are better than the Internet traders position. They have a steady income, and their activity can be considered a successful business. Dealing companies receive income from the spread, commission, bank interest, failed trades its smaller customers, working with mini and micro lots. Income Online traders are limited only successful transactions for currency (currency speculation) and, in some cases, bank interest. But in spite of this, work on Forex is very attractive. If we consider this type of activity is as "work" and not as a "game", it is possible to obtain a stable high income. The yield in this case may exceed the returns on investments in stocks, bonds or mutual funds. If we give in to temptation, and start working on Forex without having sufficient knowledge and skills, the more likely you will lose your money. Now you have good advice and what to do in the end - you decide!
Services Internet brokers in the Forex market, by contrast, can be called business. In this business, there is practically no risk. The principle of margin trading, as stated in the relevant chapter, does not allow the client dealing company to lose more money than is available in his account and "climb into the pocket of" Internet broker.
We know that the transaction in Forex are made at the interbank level. In dealing company has multicurrency accounts in the bank, where it is served. The bank provides quotes dealing company, and that, in turn, provides quotes to their clients.Typically, these quotes are different - Online traders get a few quotes from the increased size of the spread. It allows dealing company earn on the difference in the spread, because the level of interbank transactions are made at more favorable quotes. Here is an example. Suppose the bank exposes dealing center quotation USD / JPY 104.75 / 104.77 to the size of the spread is 2 points. Dealing center increases the size of the spread to 4 points and provides its customers with a quote USD / JPY 104.74 / 104.78. Suppose Internet trader opens a short position (sell US dollars) in one lot, the amount of which is equal to 100 000 dollars. Internet trader sells dollars at the price of 104.74 yen per dollar, and in fact at the interbank level, the transaction is executed at the price of 104.75 yen per dollar. We get a difference of 100 000 * (107.75 - 104.74) = 1 000 Japanese Yen, which in dollar interbank rate is approximately 1000 / 104.77 = 9.54 US dollar. This amount - a steady income dealing company that is not associated with any risk.It should be noted that this is only the income from the opening position of the client. The same number dealing company makes a closing position.It turns out about 19 dollars in revenue from the deal. If customers have thousands of dealing company, and on the day they make dozens of trades, the daily income of dealing company can make hundreds of thousands of dollars! As you can see, this is a very profitable business.
But the spread can not be the sole source of income for online brokers. Some dealing companies may be subject to the commission for the transaction, or even separate fees for opening and closing positions. In principle, such a commission similar to the income from the spread. For example, in our example, the dealing company can provide customers with a quote interbank USD / JPY 104.75 / 104.77 directly (without increasing the spread), but take the $ 19 from the customer for each transaction. It turns out the same profit. It should be noted that some Internet brokers can and take a commission and increase interbank spread. In fact, check whether dealing company increases the interbank spread or not is difficult, since quotes are constantly changing, and the interbank spread is unknown Internet trader.
The method described above income dealing company holds if the Internet trader in his work on the Forex uses standard size lots. If you are using a mini or micro lots, the situation is somewhat different. A dealing company can not make a deal on such a small amount through the bank at the inter bank level. The size of a mini lot is equivalent to $ 10 000, and a micro lot - 1 000 dollars. The minimum size of the transaction at the inter bank level - $ 100 000. How, then, will make the transaction in this case? It operates a simple statistic - 95% Internet Beginners traders lose their money at work on Forex. Typically, this is because most people are starting to work on Forex, looking for easy money. They do not study thoroughly the theory of the foreign exchange market, the tools of his analysis, the impact of the release of economic indicators on exchange rates. For such people, working at Forex turns into a game of roulette. That's because on the mini and micro lots are working, as a rule, only novice traders and amateurs, the dealing company transactions on such lots at the inter bank level does not enter. If the Internet trader closes the position for a mini or micro lot with losses, such losses are dealing company receives as profit. If the Internet trader closes the position for a mini or micro lot with a profit, the profit is paid to the dealing company. Since 95% of new traders will sooner or later lose their money, the remaining 5%, to destroy dealing company, you need to make a profit greater than the loss of the 95% most hunters for good luck. Assuming that the initial size of the account is the same for each trader, this profit should increase by 19 times, and the probability of this is negligible. Furthermore, if the Internet is a very successful trader working on a mini lots, then soon it goes to standard lots, where dealing company does not pay him an income of "own pocket", and performs operations by the bank at the inter bank level.
The above-described alternative way of earning is not advertised dealing companies.Most of them claims that all transactions are made at the interbank level, regardless of the size of the lots. But common sense and logical reasoning leads to the opposite. Perhaps the truth is somewhere in between. Everyone decides for himself what to believe and what not. But understand that most new traders lose their money is very important. Earn Forex can be, and is not a myth. But this is not enough to click on the button "make a million". Work on the Forex - a risky business, requiring Internet trader certain knowledge and skills.
An additional source of income for dealing company can become a bank interest, as described in the previous chapter. But revenues from it, as a rule, are insignificant, and to get them open position should not be closed for a long time. Online broker is much more advantageous if the positions are opened and closed Internet traders as often as possible. Indeed, as described above, each transaction is bringing Internet broker income in the form of commission or by the spread. Revenue from bank interest compared with revenues from commissions and spreads are negligible. It should be noted that dealing companies can not only earn interest on the bank, but also to pay him, and this was discussed in detail in the previous chapter.
As we can see, dealing companies are better than the Internet traders position. They have a steady income, and their activity can be considered a successful business. Dealing companies receive income from the spread, commission, bank interest, failed trades its smaller customers, working with mini and micro lots. Income Online traders are limited only successful transactions for currency (currency speculation) and, in some cases, bank interest. But in spite of this, work on Forex is very attractive. If we consider this type of activity is as "work" and not as a "game", it is possible to obtain a stable high income. The yield in this case may exceed the returns on investments in stocks, bonds or mutual funds. If we give in to temptation, and start working on Forex without having sufficient knowledge and skills, the more likely you will lose your money. Now you have good advice and what to do in the end - you decide!
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