Forex

Advantages of Forex

No commissions No clearing fees, no exchange fees, no government fees, no brokerage fees. Most retail brokers are compensated for their services through something called the “bid-ask spread". No middlemen Spot currency trading eliminates the m...

Central Banks

While the 10 largest banks which make up the forex Interbank market account for over 75% of the daily trading volume, there is actually a level of participants with even more clout in the market. While generally nowhere near as active as the banks just...

Etoro Review

PositivesTraders generally do post comments fairly regularly and you can ask questions in a twitter style format.You can Obviously check on their statistics and what they trade in what quantities, their risk/leveraging tendencies etc, and try...

EURO

EU- European Union EMU- Euro Monetary Union ECB- European Central Bank EU has 15 member countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, UK All use the EURO as...

Evaluating Customer Service

the retail forex market is a relatively new market, which means that many traders who have experience trading other markets do not have much experience with forex. When you add to this the fact that much of the market has yet to be standardized, you can...

Exchange Traded and Over the Counter Markets

we are going to look at Exchange Traded vs. Over the Counter Markets and how the fact that currencies trade over the counter affects us as traders.When trading stocks or futures you normally do so via a centralized exchange such as the New York Stock...

Forex - The Structure

we are going to look at the structure of the forex market so we can learn who exactly controls the market and how the forex broker and individual trader fit into this picture.The forex market is an over the counter market meaning that there is no...

forex 3 Major Trading sessions

we are going to look at the major sessions  where foreign exchange is traded and the characteristics of each of the 8 hour trading sessions that make up the 24 hour trading day.Unlike the futures and equities markets, the forex market trades actively ...

Forex Market Analysis Methods

Traders analyze any financial market including the forex market in one of 3 ways:1. Through Fundamental Analysis2. Through Technical Analysis3. Through a Combination of fundamental and technical analysisPeople trash technical analysis,...

Forex Market Participants : Banks, Hedge Funds, and Corporations

Behind central banks in terms of size and ability to move the foreign exchange market are the banks which make up the Interbank market. It is important to understand here that in addition to executing trades on behalf of their clients, the bank's traders...

FXCM Turmoil

7/02/2017, FXCM to Sell US Accounts to GAIN Capital The US retail FX accounts of FXCM have been transferred to Forex.com, the retail FX division of GAIN Capital. Both FXCM and GAIN Capital have confirmed the successful transfer of 47,000 accounts.The...

How Capital Flows Move the Forex Market

Capital flows encompass all of the money moving between countries as a result of investment flows into and out of countries around the world. Here instead of money flowing between countries to buy each others goods and services, we are talking about money...

Important Things to Consider When Choosing a Broker

1. Security The first and foremost characteristic that a good broker must have is a high level of security. After all, you’re not going to hand over thousands of dollars to a person who simply claims he’s legit, right?Fortunately, checking the cre...

Kathy Lien On Forex Market

 Kathy got her start in forex trading in 1999. She started at JP Morgan in a rotational program that gave her introduction to many markets, which is how she realized currencies is something she wanted to focus on. Kathy identifies herself...

Looking at Probability and Trading Success

Below is an exchange on Forex Factory, a forum for forex traders.Originally Posted* Without meaning to brew up more controversy, how do you guys measure probability objectively when starting out with a new system? * Is probability really just...

Margin in Forex

Most forex trading firms will offer leverage of up to 100 to 1 or more, which requires traders to put up only $1000 in margin for every $100,000 in positions traded. If fully used this would take a 1% move in a currency pair and turn that move into a...

Pips and Fractional Pips

Traditionally a 1 pip move in the market was the smallest move that a currency could make. Another way of looking at this is that a 1 pip move in the market is a move up or down by 1 of the number sitting the furthest to the right of the decimal point...

Rollover

What you are actually trading in the forex market is a contract which requires one currency to be exchanged for another and delivered in two business days. For example, if I buy 1 contract of EUR/JPY then I am buying 100,000 worth of Euros and selling...

The Three Economic Models of the Forex Market

By Justin StewartWe have already seen the explanation of the 4 major economic theories that exist within the Forex market. These theories were labeled as follows:1. Balance of Payments2. Interest Rate Parity3. International Fisher Effect4....

Trade Flows

As most of you are aware, when the market for something is allowed to operate in an unrestricted manner, price is set by the intersection of supply and demand. This means that if there is more demand than supply for something then price should rise. Conversely...

trading system sample

The strategy: Indicators: 20EMA. Donchian Channel 20. Slow Stochastic 5,3,3.  ATR 5. Set up your indicators on the daily chart time frame.This strategy seeks to catch price moves that develop into trends. Like many good strategies it seeks to ...

Transaction Costs

As when trading any market, the transaction costs one pays can have a significant affect on returns, especially for the active trader. Unlike other markets however, where transaction costs outside of commissions are fairly standard, because the forex...

US Dollar is the King

The US Dollar is involved in approximately 89% of all forex transactions, so the fate of the US Dollar has huge implications not only on the US Dollar, but on the forex market as a whole. While currently the US Dollar is still king of the currency world,...

What is Forex?

If you’ve ever traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet (if you’re a dude) or purse (if you’re a lady) or man purse (if you’re a metrosexual) into th...

World's Main Currencies

Although there has been much press recently about the US Dollar loosing its status, there is no doubt that as of this time and most likely for the foreseeable future, the US Dollar still reigns supreme over all other currencies of the world. The price ...

There are many interesting things that can be pointed out about the foreign exchange market, however there are a few major things that really separate this market from the equities and futures markets.

24 Hour Liquidity
Probably the biggest advantages that traders of the forex market will cite is that the market is by far the largest market in the world, and that main currencies can be traded actively 24 hours a day. The huge amount of volume traded in the world’s main currencies each day, dwarfs the volume traded in the equities and the futures markets many times over. This combined with the 24 hour trading day gives traders the ability to determine their own trading hours instead of having to trade within set hours as they would have to when trading stocks and/or futures. More importantly than this however is that as the market is more liquid than the futures and equities markets, price slippage (the difference between where you click to enter or exit a trade and where you actually get in or out) in the forex market is normally much smaller than in the stock and futures market.

The disadvantage here is that real market junkies sometimes cannot pull themselves away from the screen while the market is trading and need the finite trading hours of futures and/or stocks to force them to step away from the market. As my background is in forex I have seen many stock and futures traders burn out when trying to trade forex for this reason.

Leverage

There is more leverage provided to traders by most forex trading firms than any other market in the world. Many firms offer you up to 200 to 1 leverage which if fully used would essentially take a .5% move in the market and turn it into a 100% gain or loss on the value of the account.

As the most highly traded currencies rarely move more than a couple of percent in a day, this allows traders to tailor the forex market to their needs, making it a conservative instrument when traded without leverage or the crack cocaine of financial instruments when making full use of the leverage available.

While the availability of leverage is normally seen as an advantage in the above sense, it is also one of the places where forex gets its bad name. Many times new traders are lured to the market after seeing the ability to amplify their returns by making use of all that leverage. What these traders do not fully understand however is that leverage is a double edged sword causing greater losses just as quickly as it can cause greater profits. As a result of this lack of understanding and jackpot mentality, many beginning forex traders loose their money very quickly as a result.

Only Macro Events Affect the Forex Market

Unlike stocks where individual company events have a huge affect on price movements the most highly traded currencies are only affected by macro events like the capital flows between countries, and changes in government or central bank policies. This is often pointed to as an advantage by Forex Traders who feel that this brings less uncertainty to their trades than stock trades which can be thrown way off track if a surprise happens such as a CEO quitting or something similar in the micro picture.

This combined with the fact that there is so much liquidity in the market also makes it a much harder market for someone to come in and manipulate the price to their advantage and to the detriment of others.

The disadvantage here is that this also means less opportunities to gain an informational edge and to profit from that edge as well.

No Upward Bias

Over the long term the US stock market has always gone up giving stocks in the US an upward bias when trading. As currencies are traded in pairs when the value of one currency is falling this automatically means that the value of another currency is rising. This is an advantage from the standpoint of there is equal opportunity for profit from both long and short trades. This is a disadvantage from the standpoint of not having that upward bias working for you when you are in a long trade.