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