Types Of Forex Trading

Forex trading has become the "it" game in the economic market. People are starting to take notice and get into the program. This is perhaps because of the way the internet has made forex trading so convenient with sites mushrooming all over the world wide web.

Forex trading involves the exchange or the buying and selling of currencies or foreign money. It is used by many as an alternative to stock investing because currencies are money and are therefore more liquid. Companies also prefer dealing with forex trading for their side investments perhaps because they will have need for the currency should they decide to expand to other countries.

There are different types of forex trading that are being done in the market. They may seem at a glance, similar to each other, but they are actually not. Each has different advantages and disadvantages that a sharp forex trader should know.

Traditional Forex Trading

This involves buying a currency at a lower rate and then selling it for a higher price or exchanging it for another currency when the exchange rates go up.

Spread Betting

This is perhaps the most commonly done trading type in the world even if it is vastly different from the way forex trading is done. Spread betting does not involve any buying and selling but as it names suggests betting. A person will bet that a currency for instance will either appreciate or depreciate. When he wins, he earns money. This may seem like gambling but despite its image, a lot of people feel that it is a good way to earn from the forex trading without really risking much.

Day Trading

Quite well known, day trading is the most notorious of the types of forex trading. This involves the buying and selling of currencies but only for a day. A lot of people feel that it can be really risky but on a good day, you can yield great results in the end. Still, despite this, many experts in the industry shun this method of trading.

Auto Trading

As the name suggests is a kind wherein the forex trading happens automatically. That is why it is also called robotic trading. What happens here is a person will invest in an auto trader platform that will have automatic execution depending on its analysis. This can save someone money from paying percentages in commission and transaction fees. However, some people are not comfortable dealing with automaton.