|How Does FOREX Compare to Other Investment Markets?
In the equities and futures markets, individuals generally place their orders with a broker, who in turn routes the order to a market maker or exchange where the order is actually executed.
As a result, two parties charge fees: the broker charges a commission, and the firm who executes the order on the exchange charges a spread (a cost that is usually hidden in the equities and futures market, but is transparent in the FX market). In the FX market, you pay only a very small spread - and thus enjoy a much lower transaction cost.
Automated Margin Watcher:
Trading on margin, or with borrowed funds, in the equities and futures market is extremely risky, as the trader can be liable for more than their original deposit if the position goes against them.
In the FX market, though, trading on margin does not possess the same risk: traders' positions will be closed out if the position goes against them and their account value falls below their margin requirement.
Short Selling Without An Uptick:
Short selling, or the ability to enter a sell position and profit if the price goes down, is just as easy as buying in the currency market. While most equities markets have rules that hinder
short selling - like the uptick rule, which states that the last price must have been an upward movement before a trader can enter a short order - the currency market does not have the same rules. Traders who think the euro will rise in value can simply buy euros and sell dollars;
alternatively, those who think the euro will fall in value can sell euros and buy dollars, all through the same single trading account and with the same amount of ease. As a result, the currency market presents opportunities for profit regardless of economic cycles.
24 Hour Trading:
While most exchanges have limited hours, the banks and market makers that operate the currency market are open 24 hours a day for trading. With most forex brokers, traders have access to the FX market from Sunday 5 PM EST to Friday 4 PM EST.
100:1 Leverage on Standard Accounts:
The leverage ratio, specifies the monetary amount a trader can trade above and beyond his/her initial deposit. The FX market allows for greater maximum leverage, and thus allows traders to more precisely customize their level of risk aversion.
About the Author
Toby Smitz is a full time forex trader at fxtsp.com. Click Forex to vist our site.
Forex trading for the little guy
Since alot of these systems are dealing in Forex, we thought that we should provide a overview of what "Forex" is. The FX Market Structure The foreign exchange market is the generic term for the worldwide institutions that exist to exchange or...
The Benefits Of Trading The Forex Market
Historically, the FX market was available most to major banks,
multinational corporations and other participants who traded in
large transaction sizes and volumes. Small-scale traders
including individuals like you and I, had little access to...
The Uses in Forex Trading of Moving Averages and MACD
Moving Averages: If you consider the "trend-is-your-friend" statement of technical analysis as a true sentence, the moving averages will be very helpful. Moving averages tell the average price in a given point of time over a defined period of...
Trading Forex To Advance Your Financial Position
Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world’s financial centes New York, London, Tokyo, Frankfurt and...
Your Guide to Learning a Forex Trading System
There are a great number of people in America that are interested in investing in order to make a
tidy profit. There are many ways to invest and many ways to make profits by investing. One
method that has been gaining in popularity is that of...