Barter, Trade, Exchange

Forex brokers often tout their services as being commission free. A closer look at the inner workings of the forex market reveals that forex trading is far from free. In fact, the currency market is one of the most expensive markets to trade.

Most forex brokers don’t charge a commission to transact a trade. These brokers often market their services as being commission free, but this claim isn’t entirely true and is often misleading.

In the forex market, like every other financial market, there is a bid and an ask. The bid is the price at which you can sell a currency pair and the ask is the price at which you can buy a currency pair. The bid and ask fluctuate, or move higher and lower, as the currency pair fluctuates.

The difference between the bid and the ask is known as the spread. You pay this difference every time you transact a trade in a currency pair. The wider the spread, the more you pay to place the trade.

The spread across most forex brokers for the EUR/USD, for instance, amounts to $20 or $30 for a single standard lot. It’s much higher for the more illiquid pairs such as the cross rates like the GBP/JPY. Spreads for this famous cross rate can reach upwards of $80 for a single standard lot.

A standard lot is usually about $1,000 in equity. So think about this for a moment: A single trade in the GBP/JPY costs you about 8 percent right off the top. Put another way, the moment you click a trade through in the GBP/JPY you’re down by about 8 percent! That’s an expensive trade.

In all reality, forex trading is not commission free. The bid and ask spread, in fact, is the commission. It’s an extremely high commission, or transaction cost, when compared with other markets like stocks, mutual funds, bonds, options, and even futures, especially when looking at the spreads associated with the cross rates, exotics, and other illiquid currency pairs.

One way to minimize the transaction costs in the forex market is to focus your trading in the most liquid pairs. These pairs include the EUR/USD, GBP/USD, USD/JPY, EUR/GBP, EUR/CHF, USD/CAD, and EUR/JPY.

Another way to minimize transaction costs in the forex market is to reduce your trading frequency, or the number of trades you place. A hyper-active day trading strategy, for example, is an extremely expensive way to try to make money in the forex market. The mountain of transaction costs that you accumulate through day trading often renders the strategy entirely useless.

You might instead focus on a swing trading approach, one with which you might take a few signals per week and hold on to positions for days or weeks at a time. An even more hands-off, and cheaper, way to trade the forex market is through a trend following approach. This type of system might generate signals infrequently, but you give yourself the opportunity to ride huge trends that can produce big profits.

Steps to becoming a trader in the Foreign Exchange Market (Forex Market)

1. Understand how the forex market works: This includes understanding forex terminology, understanding the concept of “currency pairs”, understanding technical analysis, and more.

2. Find a broker with a free demo account: On this step, it isn’t that important to find a trusted broker, but if you would like to save yourself a step down the road, you can read broker reviews, etc. to find a trusted broker. A demo account allows you to practice trading at no financial risk.

3. Develop a trading strategy: This should be done while trading on a demo account. Developing a trading strategy on a live account could have an immense negative financial impact. It is suggested to have at least 6 months of experience on a demo account before investing money into the foreign exchange market (Forex market).

4. Find a Trusted Broker: If you did not complete this step during step (2), you will want to complete this step.

5. Invest what you can afford to lose: If you cannot afford to lose the money you plan on investing, my suggestion would be to not invest that much money. Many traders have the mindset that the more money they invest, the more money they can make, which is absolutely a true statement but keep in mind that the more money invested also means you could lose all of that money. This arises the question: Can you truly afford to lose that money?

6. Withdrawing money wisely: In the above step, we discovered that the more money we have to trade with, the more money we can make. When we reach a comfortable account balance, and we want to withdrawal some money, how much should we take out of our account balance? Our rule of thumb is to only take out 10% of our account balance each month (only applies to those who trade frequently throughout the month). For example, if our account balance at the end of a given month was $1000.00, we would withdrawal $100.00. This gives of $900.00 to trade with for the next month. If our account balance reaches $2,200 the next month, we would withdrawal $220.00. This gives us an account balance of $1,980.00. Many traders get excited when they see their account balance and withdraw close to 80% of their account! Remember what we stated above, the more money we have to trade with, the more money we make! If one constantly has a low balance, he/she won’t make as much as one who follows the 10% monthly withdrawal rule.

7. You are now a forex market trader!

There’s one business organization busier now than at this time last year and, believe it or not, it’s because of the credit crunch. Their member businesses know that if they can’t get credit at the bank, they have an alternative payment system represented by the leader in business to business barter services, International Monetary Systems, Ltd. (OTCBB:INLM).

“The fundamentals of barter state that in a slow economy, business owners look to alternative means to stabilize cash flow and to keep new business coming in,” says Don Mardak, CEO of IMS. “So, the increase in our membership was anticipated. However, we didn’t anticipate the increase in requests for credit.”

In the last 20 days, IMS has processed and issued $2.7 million dollars in IMS trade credit to their nationwide network of 18,000 businesses. And they are not at all concerned about adding this to their already existing $55 million dollars in established credit lines. How is a barter organization able to do this when major banks around the country have ceased lending? “Because we base our credit on the products and services that the member businesses have to offer, not on their cash accounts, such as receivables or how they look on paper,” says Mardak. “So, while the bank might not be able to issue credit, our alternative currency system enables us to go about it differently and, some say, more accurately and responsibly.”

In Switzerland, the WIR barter network is a similar alternative currency system. Started in 1934, WIR has 85,000 clients in Switzerland, or 20% of all Swiss businesses. The WIR system is recognized as an important stabilizing force for the entire Swiss economy.

Mardak continues, “If we as a country have learned anything from this current economic crisis, it is that any currency system must be operated prudently and responsibly, especially when issuing credit. IMS has a 23-year history of managing a healthy barter network. The opportunity to issue credit where credit is due is what we’re all about.”

Bartering yields additional benefits. It allows companies to move excess inventory more profitably than liquidation, receiving up to full wholesale value. It allows them to purchase virtually any business necessity, even advertising space. It’s also a powerful marketing vehicle that brings buyers and sellers together. Some actively bartering companies conduct 5 to 10 percent of their business through trades.

It’s estimated that the industry generates nearly $3-4 billion in annual sales. There are about 250 barter exchanges in the U.S. and another 150 abroad.

The Department of Commerce estimates that 20 percent of world trade is accomplished through bartering…yet there is enormous growth potential in the U.S., where only one percent of total commerce is conducted through barter. Cash is king, but not for long.

In North and South Carolina Barter Brokers International, (barterbrokers.com) is one of the fastest growing barter exchanges and has been helping all types of businesses capitalize on their excess capacity to buy the things they need.

Naturally, women are shopping freaks. A report was given out before saying that women have contributed a lot in the survival of the economy because they are the ones who are into buying anything that they might need. Whether it’s for the house, the kids, the closet, herself! The list is never ending.

In bazaars and malls, it is a woman’s ability to have a rapid eye assessment on items that are on display. Most often, women are impulsive buyers and would do anything to purchase the item that she fell for. And women will always turn to their men to get all puppy-eyed and make him buy it for her.

Be straightforward on the things that you need and want

It is a pleasure for a man to satisfy her materialistic cravings. This is where women often have a mistake because they pretend that it’s okay not to have that item but men can’t read women’s mind so telling him exactly what you wanted will get him to buy it for you.

Show that you are very interested

Telling him about it, the advantages of having the item and its features will make him buy the product for you.

Compromise

Give him flexible options to choose from if he can’t afford to buy what you wanted at the moment. You can do bargaining or allow him to barter something from you for him to agree on buying you anything that you desired.

Be patient even when everything’s complex

If a guy is not capable of buying it at the moment, then don’t wallow in self pity. Men work hard to provide women their needs and want so wait because men also have an inkling of the things that you want.

Stay kind -hearted

Provide as much care and love. It doesn’t mean that doing this comes with a price but remember what BF Skinner’s theory of operant conditioning is all about, positive reinforcement. Rewarding every good deed that one does.

Be sensitive on the budget

If you want to buy more, you should know how to maximize his finances. Men are not that stupid to spend thousands for just a meager meal or whatever.

Do not ask things from him all the time

He is not your automated teller machine to which you can withdraw money anytime. Show him that you have your share as well. This makes him a little conscientious and will eventually make it up with you.