Tuesday, November 24, 2009

Increased Leverage

Increased Leverage
The Forex market allows you to control $100,000 with as little as
$1,000. This means that you can make your money work harder for
you in the Forex market than it can anywhere else. Imagine. You
can keep all the profits from a $100,000 trade, and all you have to
do is provide 1 percent of the money.
To put this in perspective, imagine that you are a real estate
investor, and you see a $300,000 home that you believe is going to
increase in value. If you could use the same amount of leverage in
the real estate market as you can in the Forex market, you could
buy that house with only $3,000 down and a potentially interestfree
loan. That would be incredible. Any real estate investor in the
country would do anything to get that kind of a deal, and that is
exactly the opportunity you have in the Forex market.
Increased leverage is also the point that well-intentioned, but
misinformed people point to when they say that investing in the
Forex market is risky. Granted, this amount of leverage may seem
aggressive, but the Forex market gives you the perfect antidote for
the risks associated with increased leverage: guaranteed stops.

No Commissions

No Commissions
Every time you buy a stock, a bond, a mutual fund, or a home, you
are paying someone somewhere a commission. In the Forex market,
however, you never have to pay a commission. The price you see is
the price you get. You don’t have to factor in a little extra for the
broker. You simply pay the listed price. No more, no less.

Trading Hours

The Forex market is open 24 hours a day nearly 51⁄2 days a week.
It doesn’t matter if you’re working or retired, a homemaker or a
student, you can find a time that works for you to get involved in
the Forex market. In fact, the Forex market is usually most active
early in the morning and late and night. There are many part-time
traders who are able to use these varied hours of market activity to
their advantage by trading when they are not at work. The varied
trading hours of the Forex market also benefit long-term investors
because these investors are able to enter and exit their positions
whenever the market dictates.

Tax Advantages of the Forex Marke

Tax Advantages of the Forex Market We all want to keep
as much of our profit as we possibly can, and the Forex market allows
us to do that. Even though you entered and exited your trade in the
Forex market within six months—just as you did for your stock
trade—only a portion (40 percent) of your profits is taxed as shortterm
capital gains. The remaining 60 percent of your profits get the
benefit of being taxed as long-term capital gains. This means that
you will have to pay 33 percent on only $4,000 and—according to
current long-term capital gains rates—15 percent on $6,000.
Portion Taxed as Short-Term Capital Gains
$10,000  40% = $4,000
$4,000  33% = $1,320
Portion Taxed as Long-Term Capital Gains
$10,000  60% = $6,000
$6,000  15% = $900
Total Taxes Paid
$1,320 + $900 = $2,220
You would have to pay only $2,220 with your Forex trade compared
to the $3,300 you would have to pay with your stock trade.
That is a savings of slightly more than 35 percent. Tax savings like
that can add up quickly.
You can also accumulate profits quickly by investing in the
Forex market within your IRA or other tax-deferred retirement
account. Many investors are unaware they can trade anything but
stocks and mutual funds within their retirement accounts because
their brokers have conditioned them to focus only on these asset
categories. Some brokers don’t want to deal with the extra work
that would come from allowing you to invest more freely. It isn’t
advantageous for them. On the other hand, other brokers believe
that you should be able to choose where you put your money.
Check with your brokerage firm and see if it offers self-directed
options in its retirement accounts.

Tax Treatment of the Stock Market

Tax Treatment of the Stock Market Since you entered and
exited your trade in the stock market within six months, you will
have to pay short-term capital gains tax. If you are in the 33 percent
tax bracket, you will have to pay 33 percent tax on of the profits. So
for a profit of $10,000, you will end up paying $3,300 in taxes.
Profiting with Forex 5
$10,000  33% = $3,300
While you did get to keep $6,700 of the original $10,000 profit,
it is never fun to pay taxes.
Tax Advantages of the Forex Market We all want to keep
as much of our profit as we possibly can, and the Forex market allows
us to do that. Even though you entered and exited your trade in the
Forex market within six months—just as you did for your stock
trade—only a portion (40 percent) of your profits is taxed as shortterm
capital gains. The remaining 60 percent of your profits get the
benefit of being taxed as long-term capital gains. This means that
you will have to pay 33 percent on only $4,000 and—according to
current long-term capital gains rates—15 percent on $6,000.
Portion Taxed as Short-Term Capital Gains
$10,000  40% = $4,000
$4,000  33% = $1,320
Portion Taxed as Long-Term Capital Gains
$10,000  60% = $6,000
$6,000  15% = $900
Total Taxes Paid
$1,320 + $900 = $2,220
You would have to pay only $2,220 with your Forex trade compared
to the $3,300 you would have to pay with your stock trade.
That is a savings of slightly more than 35 percent. Tax savings like
that can add up quickly.
You can also accumulate profits quickly by investing in the
Forex market within your IRA or other tax-deferred retirement
account. Many investors are unaware they can trade anything but
stocks and mutual funds within their retirement accounts because
their brokers have conditioned them to focus only on these asset
categories. Some brokers don’t want to deal with the extra work
that would come from allowing you to invest more freely. It isn’t
advantageous for them. On the other hand, other brokers believe
that you should be able to choose where you put your money.
Check with your brokerage firm and see if it offers self-directed
options in its retirement accounts.

Ease of Entry

You do not have to be rich to trade in the Forex market. Everybody
deserves to be able to protect his or her financial future, and the
Forex market makes this possible by offering an extremely low
barrier to entry. In fact, you can open a Forex account with as little
as $300.
Profit Potential
It doesn’t matter if the value of the U.S. dollar is going up or down.
You can make money in the Forex market. If you think its value is
going up, you simply buy the U.S. dollar and make money all the
way up. If you think its value is going down, you simply sell the U.S.
dollar and make money all the way down.
Tax Advantages
When you invest in most financial markets, you must pay short-term
capital gains tax if you take your profits within one year of purchasing
a security. If you hold the security for more than one year
before taking your profits, you must pay long-term capital gains tax.
Currently, short-term capital gains are taxed at your current tax rate,
and long-term capital gains are taxed at only 15 percent. Obviously,
it is much better to pay less in taxes. In the Forex market—much to
investors’ delight—it doesn’t matter if you take your profits one
minute after you enter a trade or one month after you enter a trade.
Sixty percent of your profits are taxed at long-term capital gains
rates, while only 40 percent of your profits are taxed at short-term
capital gains rates. That means you keep more of your profits in
your pockets.
For example, imagine you made $10,000 on a six-month trade
in the stock market and that you also made $10,000 on a six-month
trade in the Forex market. Both trades occurred in taxable accounts,
so you owe taxes on both. Assume you are in the 33 percent tax
bracket.

Market Size

The Forex market is the largest financial market in the world. (See
Figure 1.1.) Nearly $2 trillion change hands every day. To give you
an idea of what an awesome number that is, the New York Stock
Exchange experienced record volume during the third quarter of
1998 and cleared only $1.9 trillion in volume—60 times less than the
Forex market clears in a quarter. Being the largest financial market
in the world is advantageous; it makes buying and selling currencies
extremely easy because there are so many buyers and sellers out
there. Imagine that you are trying to sell your home, and you had
thousands of people standing at your front door—cash in hand—
ready to buy the house. It wouldn’t be too tough to sell the house.
The second advantage of the size of the Forex market is that
investors are unable to manipulate it. Since potential manipulation
is virtually nonexistent, you can be confident that the prices you
are getting in the Forex market are fair prices.

THE ADVANTAGES OF THE FOREX MARKET

The Forex market enjoys unparalleled advantages. You will find
that some markets share similar advantages, but no one market on
Profiting with Forex 3
earth comes close to rivaling the protection, profit potential, and
ease of use available in the Forex market. Take a look at the advantages
you can find within the Forex market.

WHAT IS THE FOREX MARKET?

The Forex market is the largest financial market in the world. Nearly
$2 trillion worth of foreign currencies trade back and forth across the
Forex market every day. Forex stands for the foreign exchange—the
financial exchange on which governments, banks, international corporations,
hedge funds, and individual investors exchange foreign
currencies.
For instance, when you fly to another country, one of the first
things you do when you get off the plane is look for a currency
exchange counter where you can exchange your U.S. dollars for
whatever currency is used in the country you are visiting—such as
British pounds, Japanese yen, or euros. Why do you do this? Because
you know that the cab driver, the hotel clerk, and the souvenir salesperson
are all going to want you to pay them in their national currency,
not U.S. dollars.
When you slide your U.S. dollars over to the teller and he or she
slides back a stack of multicolored bills—let’s face it, foreign money
is a lot more colorful than the greenback—you have just participated
in the Forex market. You exchanged one currency for another. Now,
if you stop and think about all the people who travel, all the businesses
that operate in multiple countries, and all the governments
that are exchanging money, you can start to get an idea of how big
the Forex market really is.
Those of you who travel abroad frequently have probably also
noticed that the exchange rates at the currency counter at the airport
never seem to be the same. They are constantly changing. Sometimes
you get a lot more bang for your buck when you exchange your
money, and sometimes you have to exchange a few more U.S. dollars
just to get by. That is because exchange rates are constantly changing,
and it is these changes in exchange rates that enable you to make a
lot of money in the Forex market.

Profiting with Forex

peculate on the wild swings in the price of crude oil and offset some
risk in pork belly and soybean futures. But, really, who has time for
all that?
If you’re like most of us, you’ve got a 401(k), an IRA, or another
type of retirement vehicle into which you are putting the majority
of your savings. And that’s a good thing. The stock market has
done extremely well over the long term and deserves a place in
your overall portfolio. But wouldn’t it be nice if there were a way
you could address all the other issues just mentioned without having
to become a financial genius? Well, there is.
The Forex market enables you to have the best of both worlds.
When stock prices go up, you can profit with the Forex market. When
stock prices go down, you can profit with the Forex market. When
emerging markets gain strength and begin to grow at exponential
rates, you can profit with the Forex market. It doesn’t matter if inflation
levels are going up or if inflation levels are going down; you
can profit with the Forex market. And as oil and other commodity
prices fluctuate up and down and up and down, you can profit
with the Forex market. You will be amazed at how easy it is to get
involved and make money in this incredible market.
Finally, there is a way for all investors—no matter how big or
small—to harness the world around them and secure their financial
future. The Forex market is available to everyone, yet so few people
know about this universal tool. As you read this book and learn
more and more about the Forex market, we guarantee that you will
ask yourself the same question over and over again, “Why in the
world have I not been taking advantage of the Forex market until
now?” Maybe you’ve never heard of the Forex market. Maybe you’ve
heard of it but never really knew anything about it. Whatever the
reason, today is your day to get started. Once you do, you’ll never
look back.
This book will introduce you to all the advantages of the Forex
market and show you how to profit from it. It addresses the questions
you have concerning your financial future. And, most importantly,
it will show you how you can implement the things you
learn in your own investing. The Forex market has changed our
lives. It has changed the way we view the financial marketplace.
We used to see obstacles and limitations. Now all we see are opportunities
and freedom. The Forex market is the perfect supplement
to our stock and bond investing. It enables us to profit from what-

Profiting with Forex

1
There is a Forex solution to every question you’ve ever asked about
your financial future. We talk with people every day who want to
know how they can take advantage of both the good times and the
bad times in the economy. They want to know how to profit from
the stock market when it is going up and how they can protect themselves
when it is going down. They want to know how they can take
advantage of the unprecedented economic growth in China, India,
and other emerging markets. They want to know how to combat
inflation to ensure that their retirement nest egg will continue to
provide an enjoyable lifestyle. They want to know if there is anything
they can do to offset rising oil prices. They want to know
how to improve their budget when commodity prices—from the
price of the orange juice they buy at the store to the price of the
lumber for their new home—start to rise. Mostly, they want to make
profits. And every time they ask us, we respond with one word:
Forex.
Certainly, you could devote your life to learning to understand
stocks, mutual funds, and options to take advantage of the ups and
downs of the stock market. And you could learn about foreign
bonds and exchange-traded funds to take advantage of the growth
of the emerging markets around the world. Plus, you could master
interest rate futures and government bonds to combat inflation.
And to top it all off, you could dive into the commodities market to

Thursday, November 19, 2009

LEARN TO TRADE CFDs & FOREX

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