Ask anyone about financial markets and one of their first thoughts is volatility. Many ordinary people fear volatility but retail Forex traders love volatility! Traders see volatility as an opportunity, where the mis-pricing of securities leads to the possibility of profiting from trading. Yet every form of trading is risky, and requires hard work to take advantage of the opportunities presented!
Ask anyone about financial markets and one of their first thoughts is volatility. Many ordinary people fear volatility but retail Forex traders love volatility! Traders see volatility as an opportunity, where the mis-pricing of securities leads to the possibility of profiting from trading. Yet every form of trading is risky, and requires hard work to take advantage of the opportunities presented!
OANDA (www.oanda.com) boasts of a high level of trust and reliability, as evidenced by its impressive Trust Score of 93 out of 99. While OANDA is not a publicly traded company nor does it operate as a bank, it is subject to regulation by seven Tier-1 regulators, signifying a highly trusted status. Additionally, it is supervised by one Tier-4 regulator, which means that users should utilize a cautious approach to risk management. eToro.com is a reputable trading platform, famous in the social trading industry. In 2018, the brand decided to conquer the US market and launched the local brand there. First, the company functioned solely as a crypto trading broker. Yet, later it added other items to its list of tradeable assets. Therefore, now it offers stocks and ETF trading as well. With a history dating back to 2007, eToro has amassed a large user base across more than 140 countries. When cryptocurrency emerged, the brand used a unique chance to enter the American market. One of its key features is CopyTrader, the social trading tool and a proprietary product of the project. It allows novices to repeat trades from top traders with just a few clicks. Thus, the tool offers a fresh approach to this asset class. This guide aims to provide a comprehensive eToro review to help traders make informed decisions. eToro offers trading services across many regions worldwide including the USA A standalone copy-trading ecosystem, providing equities, foreign exchange, commodities and cryptocurrencies markets. Provides a global selection of brokerages.
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OANDA Corporation is regulated by the CFTC/NFA. OANDA is a member Firm of the NFA (Member ID: 0325821). CFDs are not available to residents in the United States.
Volatility is a statistical measure of the dispersion of returns for a given security or market index. In simpler terms it is the response of an asset price to an unexpected piece of news. This response can be positive, i.e. the asset price goes up or negative, the asset price go down. Any market, be it foreign currency or stocks values its assets by information available in the public domain (or sometimes not!).
When there is a new piece of news, markets adjust their future projections and therefore their asset prices. What financial markets really really hate is a sudden piece of news which it does not understand, and critically cannot quantify! Enter the Coronavirius stage left. Uncertainty and an inability to correctly price an event leads to differing opinions as to the true value of a security, which means different prices. These differing prices translate to a volatile chart or graph as the financial market responds to the different price points.
Trading and investing are often used interchangeably to describe buying and selling listed investments. Yet there is a subtle and actually rather large difference between the two. Investing is buying and holding the investment. You are analysis the cash flows of the company and compounded your return by re-investing dividends or interest earned. Trading you are focusing on the chart, and ignoring news such as company reports and economic forecasts. This is also known as technical trading.
Typically volatility trading is associated with stocks which are known to be volatile. Recently after the stock market had its worst sell off in 10 years, the S&P 500 responded by having one of it's best days in 10 years! And that is with a virus spreading that no-one understands and whose financial effects we cannot as yet quantify! The risk with stocks is that you lose everything, just ask shareholders of Carillion.
If you are thinking of trading volatility and have limited experience of any form of trading, why not trade Forex? Learning to trade Forex has its advantages. The advantage of Forex zero-sum game is not to be underestimated. With the recognised major currencies, you have a degree of certainty that they are unlikely to disappear. Tried and tested measures such as the risk reward ratio ensure that you can limit your losses.
Yet most attractive for anyone looking to trade volatility is that the Forex market is the deepest in the world. Anyone who has traded stocks will know the frustration when they cannot place a trade. Few stockbroker platforms can truly handle the volume of trades in a volatile period. When you ring the dealing desk you get placed on hold for minutes on end while watching your opportunity disappear.
Embracing volatility, uncertainty, change and being flexible is hard for humans. We are creatures of habit who like to do things our own way. Not being able to control events is hard for humans. Yet in this organised chaos that are financial markets, there are Forex trading opportunities to take advantage of. Knowing how to do so is the next step and having a trading plan is critical!
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