discussion response

You must reply to at least three colleagues in a manner that extends the discussion. A simple “I agree/disagree” will not be accepted. respond in a manner that further extends the discussion.

post 1.

What are the risks of keeping a large open position over the weekend? How to control this risk?
One of the risk of keeping an open position over the weekend is called a weekend gap. Forex markets close Friday afternoon and open Sunday evening. With that being said, there can be massive news that impacts these markets. You can control this risk by keeping track of Friday closing prices to determine if the gap can be traded by Sunday. Use charts to help determine gap filling.

Reference:

Rogers, Karen. How to Trade the FOREX Weekend Gaps. Finance, 21 Nov. 2017, finance.zacks.com/trade-forex-weekend-gaps-5467.html.

post 2.

What is open position? What is closed position?

A position in trading is essentially your stance in the market and the state of a trade after being in the market.  For taking an open position, this is when a trader has entered the market and they “open” a position in the market.  Someone who has an open position holds a quantity of some type of tradable asset.  For taking a closed position, this is when a trader is leaving the market and they “close” their position in the market.  Someone who has a closed position either buys or sells a given quantity of a tradable asset in the market.

(Links to an external site.)

Orlov, Andrey. (2018, July 23). Positions, Open and Closed. Retrieved October 8, 2020, from https://news.tradimo.com/glossary/positions-open-and-closed/

post 3.

How foreign currency trading is different from common stock trading?

Forex trading has several key differences from stock trading.  For example, forex trading is a 24-hour market, whereas stock trading can only take place during market hours Mon-Fri.  This allows for greater access to traders with restrictive work schedules.  Also, forex traders generally have access to much higher levels of leverage than equity traders.  Commonly, this is a 50:1 leverage ratio for forex vs only 2:1 leverage for stocks.  Lastly, tax treatment may be more favorable on forex trading than short-term stock trading, although it can be difficult to prepare taxes with forex trades.

Reference:

Folger, J. (2020, August 29). Investing in Forex vs. Stocks. Retrieved October 11, 2020, from https://www.investopedia.com/articles/forex/11/forex-or-stocks.asp