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 FOREX
vs. FUTURES
Remember that both futures and forex trading involve risk. Forex
trading is not conducted on a regulated exchange and as a result,
there are additional risks associated with forex trading.
Highly Trending markets
Because the foreign exchange market gaps are very limited (the
market is closed briefly on weekends), it's not dramatically
affected by buying programs that allow it to be easily manipulated.
The forex market offers some of the smoothest trends available in
any market. No other market can come close to the amount of monetary
volume and participation as the forex market making it a haven for
traders not having to deal with gaps and price movements, erratic
spikes and other choppy market conditions more commonly experienced
in the lower volume markets, like futures or options.
No Commissions or Hidden Fees
Though some speculators are unaware, all financial markets have a
spread (the difference between the bid and ask price). In the
futures market you are not only paying the spread, but you are also
paying commission charges, clearing and exchange fees on top of the
spread. Ticker prices in the futures market typically signify the
last traded price, not the spread. Global Forex Trading offers you
commission-free trading on tradable prices (GFT is compensated by
revenues from its activites as a currency dealer, including proceeds
from buying, selling, converting as well as holding currencies and
interest on deposited funds and rollover fees.). In a sense, what
you see is what you get, allowing you to make quick decisions on
your forex trades without having to account for fees that may affect
your profit/loss.
Better Leverage
Trading in the spot currency markets provides advantages over
trading currency futures contracts. One of the main advantages for
traders trading spot currencies is the margin rate or leverage that
clients are given. In spot currency trading, customers receive one
low margin rate for trades done 24 hours a day. In currency futures
trading, the client has one margin rate for "day" trades and one
margin rate for "overnight" positions. This can become a hassle for
traders and decreases the overall tradability of the currency
futures markets. Margin rates in spot currency trading vary from
around 1 to 5 percent depending on the size of transactions a
particular trader initiates. Global Forex Trading's spot currency
trading gives the customer one rate all the time, no hassles and no
margin calls. One rate so that the trader can manage their own risk
efficiently and simply.
24-hour Trading
Since the forex market, in a sense, follows the sun around the
globe the market, it rarely experiences periods of illiquidity. What
this means is that any trader in any time zone can trade forex at
any time during the day or night. You no longer have to wait for the
market to open when news has already hit the streets or have to stop
trading because the CME, CBOT or other American futures pits have
closed for the day. This gives the forex trader added flexibility
and continuous market opportunities that just aren't available in
futures.
To explain the global effect on the forex market, there are three
main economic zones that are linked throughout the world. For
instance, when the Pacific Rim markets such as Japan and Singapore
begin to slow, the European markets of England, Switzerland and
Germany begin. These forex markets are followed by the North
American markets of the United States, Canada and Mexico. As the
North American markets begin to slow down for the evening, the
Pacific Rim starts their trading day again. This example shows that
you are no longer limited to trading using a comparatively short,
trading day offered by U.S. markets only.
Foreign exchange is one of the few true 24-hour markets. When
trading forex, clients enjoy unparalleled liquidity 24 hours a day.
In many futures markets, however, the overnight access available to
traders is simply window dressing. The lack of liquidity and
restrictions on what types of orders a client can place make trading
and protecting positions a nightmare.
A good example is the Globex market. While the Globex market is
only closed for a 15 minute period each day, the liquidity available
after the open outcry market is closed in Chicago is normally very
low. Spreads are wider and the ability to place larger orders is
non-existent. Because of this, most volume traders are forced into
trading the exchange for physical market overnight. The EFP market is the spot market priced
in futures pricing. EFP's, however, come with additional fees and
are not available from an electronic interface. Electronic access,
speed, no fees and unmatched liquidity, 24-hours-a-day makes spot
forex the choice for the foreign currency trader.
Forex Methodology
Foreign exchange is the principal market of the world. If you
study any market trading through the civilized world everything is
valued in money, the root of all pricing. Global finance is the
distribution and redistribution of money throughout different
channels and different financial derivatives. Trading spot
currencies can be done with many different methods and you will find
many types of traders. From fundamental traders speculating on
mid-to-long term positions based on worldwide cash flow analysis and
fixed income formulas, to the technical trader watching for breakout
patterns in consolidating markets or the Gann fanatic looking to
duplicate the techniques of W.D. Gann, the methods for trading
foreign exchange are many. Spot
currencies are a great market for the "trader". It is where
"big boys" trade and can provide both large profit potential as well
as commensurate risk for the speculator. Currency trading is not
conducted on a regulated exchange, and as a result there are
associated risks with forex trading.
(global forex)
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Forex
Introduction