| For hundreds of years stocks have been a | | | | trades are commission-free. Brokers earn |
| popular investment. Companies issue stocks to | | | | money by setting a spread -- the difference |
| raise capital for expansion and new projects. | | | | between asking and selling prices. |
| Each share of the stock represents a partial | | | | |
| ownership in the company. When the company | | | | The FOREX is the largest financial market in |
| makes a profit, the value of the stocks rise. | | | | the world, with transactions worth $1.5 |
| Stock owners can sell their shares for a | | | | trillion every day. By comparison, all the |
| profit, or hold on to the stock for even more | | | | American stock exchanges combined handle |
| gain in the future. Sometimes companies will | | | | about $100 billion. The huge volume of FOREX |
| issue dividends -- part of the profits that | | | | allows it to be 1 of the most liquid markets |
| are distributed to share holders. | | | | in the world. There is always a buyer and |
| | | | seller for any type of currency, because the |
| Stock Exchanges | | | | world economy relies on the movement of goods |
| | | | from country to country. The stock market is |
| Stocks are traded on stock exchanges. Most | | | | less liquid because participants may choose |
| stocks are bought and sold through brokers | | | | to hold their investments indefinitely or |
| who charge a commission or fee for this | | | | move on to other markets. |
| service. United States stock exchanges | | | | |
| include the New York Stock Exchange (NYSE), | | | | Non-Stop Trading 5 Days A Week |
| the American Stock Exchange, and the National | | | | |
| Association of Securities Dealers Automated | | | | The FOREX is not based in any 1 location. |
| Quotation System (NASDAQ). Most stocks are | | | | Trading markets are located worldwide and, |
| listed only on 1 exchange. | | | | due to time zone differences, trades can be |
| | | | made 24 hours a day, 5 days a week. Trading |
| Long-Term Trading Vs. Day Trading | | | | begins in Sydney, Australia on Monday morning |
| | | | (Sunday afternoon New York time) and |
| Stocks were traditionally seen as long-term | | | | continues non-stop until Friday afternoon New |
| investments. So-called "blue chip" stocks, | | | | York time. Stock exchanges have more limited |
| those having proven value over many years, | | | | trading hours. While it is possible to trade |
| often formed the basis of an investment | | | | on exchanges worldwide, each exchange is |
| portfolio. | | | | independent and operates for just 7 hours a |
| | | | day. It is not possible to buy or sell a |
| Short-term trading is a relatively new | | | | certain stock that is traded only on 1 stock |
| phenomenon in stock trading, made possible by | | | | exchange when that exchange is closed. |
| the advent of the internet. Day traders | | | | |
| attempt to take advantage of large daily | | | | Other FOREX Advantages |
| fluctuations in the market by buying and | | | | |
| selling many times in a single trading day. | | | | It is more predictable than stocks; it |
| This is relatively risky, and any profits are | | | | follows well-established trends. |
| reduced by the broker commissions charged on | | | | |
| each transaction. | | | | It allows high leverage -- typically 100:1 as |
| | | | opposed to 2:1 on the stock market |
| FOREX | | | | |
| | | | It doesn't require a large investment -- mini |
| The Foreign Exchange Market (FOREX) is quite | | | | accounts as small as $250 can get you started |
| different from the stock exchange. FOREX is | | | | in FOREX. |
| primarily a short-term market. Most traders | | | | |
| enter and exit deals within a 24 hour period | | | | FOREX trading is not without risk. Neither is |
| -- sometimes within a few minutes. Many FOREX | | | | the stock market. Either trading vehicle |
| trades can be made in 1 day without building | | | | requires education, planning, discipline, and |
| up a large brokerage fee, because FOREX | | | | some disposable income. |