24- Hour a day market, 6 days a week

No single entity one can control the market

Large Liquidity in the FX

Low transaction (spread) costs

High Leverage*

Trading potential in both rising and falling markets

Interbank market

Buy long or sell short with no limitations

No waiting periods between trades with small accounts


24-Hour a day, 6 days a week

The FOREX Market never sleeps. A currency trader may take advantage of all market conditions at any time. There is no waiting for an opening bell. It is a 24-hour, continuous currency exchange that never closes (normal dealing hours of operation are Sunday 5:15 pm through Friday 4 pm Eastern standard time), you can trade whenever you want: morning, noon or night. This is a very big advantage compared to stock trading with limited trading hours.

No single entity one can control the market

The Forex market has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. Even interventions by mighty central banks are becoming increasingly ineffectual and short lived, at the stock market, trade prices can be manipulated by stockbrokers and market makers.

Large Liquidity in the FX

With $2.1 trillion changing hands daily, the FX market is extremely liquid. This means you can rapidly buy and sell currencies at any offered market price. You can even set the online trading platform to quickly close your position at your desired profit level (limit order), and/or close a trade if a trade is going against you (stop order)**.

Using a trailing stop can be a powerful tool to maximize your trading potential.


Low transaction (spread) costs

There are no brokerage commission fees for each FX transaction, for all the major currency pairs, the spread is around 3-5 pips and is the only cost.

High Leverage*

FOREX investors are permitted to trade foreign currencies on a highly leveraged basis which could be up to 100 times their investment. An investment of US $1,000 controls US $100,000 of any particular currency. A small margin deposit can control a much larger total contract value.

*Leverage without proper risk management, this high degree of leverage can lead to large losses as well as gains.


Trading potential in both rising and falling markets

Trading currency allows traders to trade during rising and falling markets. One can just as easily "short" a particular currency as go "long", because currencies trade in "pairs". Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other.

Interbank market

The backbone of the Forex market consists of a global network of dealers. They are mainly major commercial banks that communicate and trade with one another and with their clients through electronic networks and telephones. There are no organized exchanges to serve as a central location to facilitate transactions the way the New York Stock Exchange serves the equity markets.

In the FX market the cost is limited to the spread

In the currency market, you pay no commissions and no exchange fees because you deal directly with the market maker in a purely electronic online exchange. This eliminates both ticket costs and middleman brokerage fees. There is still a cost to initiating the trade, but that cost is reflected in the bid/ask spread that is also present in all markets including futures or equities trading. Combined with the tight, consistent, and fully transparent spread, currency trading costs are lower than any other market.

Active stock traders often see substantial portions of their gross profit go to brokers in the form of commissions, and the exchanges in the form of exchange fees. Those equity brokers that advertise enticing commissions, do not have fixed spreads between the bid and ask and may vary with market conditions, particularly with smaller less liquid stocks.


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 trading 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 FXCM in particular, clients are afforded access to the FX market from Sunday 5.15 PM EST to Friday 4 PM EST - but can enjoy customer support for all issues 24 hours a day, 7 days a week.

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.

*Without proper risk management, this high degree of leverage can lead to large losses as well as gains


Online Currency Trading: A Growing Trend

Online currency trading is the fastest growing market. The FOREX Market never sleeps. A currency trader may take advantage of all market conditions at any time. There is no waiting for an opening bell as in the case of trading stocks. It is a 24-hour, continuous currency exchange that never closes (normal hours of operation are Sunday 1pm through Friday 2pm Pacific standard time). This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade: morning, noon or night.
e world. Traditionally the foreign exchange market was only available to larger entities trading currencies for commercial and investment purposes through banks. Now online currency trading platforms, such as the FX Trading Station, allow smaller financial institutions and retail investors access a similar level of liquidity as the major foreign exchange banks, by offering a gateway to the primary (Interbank) market.


About Quoting of Currency Pairs

The first currency in the pair is referred to as the base currency, and the second currency is the counter or quote currency. The U.S Dollar, as the world’s dominant currency, is usually considered the base currency for quotes, and includes USD/JPY, USD/CHF, and USD/CAD. This means that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The exceptions are the Euro, Great Britain pound, and Australian dollar. These currencies are quoted as dollars per foreign currency.

As with all financial products, FX quotes include a "bid" and "ask". The bid is the price at which a market maker is willing to buy (and clients can sell) the base currency in exchange for the counter currency. The ask is the price at which a market maker will sell (and clients can buy) the base currency in exchange for the counter currency. The difference between the bid and the ask price is referred to as the spread.

In the wholesale market, currencies are quoted using five significant numbers, with the last placeholder called a point or a pip. In forex, like any traded instrument, there is an immediate cost in establishing a position. For example, USD/JPY may bid at 131.40 and ask at 131.45, this five-pip spread defines the trader’s cost, which can be recovered with a favorable currency move in the market. For our spreads on all the currency pairs we offer, click here.

Bid / Ask Price

A currency exchange rate is typically given as a bid price and an ask price. The "bid price" is always lower than the ask price. The bid price represents what will be obtained in the quoted currency when selling one unit of the base currency. The "ask price" represents what has to be paid in the quote currency to obtain one unit of the base currency.For example GBP/USD: 1.8920 (bid) /1.8925 (ask).



Spread


The difference between the bid and the ask price is referred to as the "spread".


Interest Rollover


When a position is still open at 5pm EST, trader need to pay a daily rollover interest on that position, the price you have to pay is always listed on the tradestation. If you don't want to pay, be sure the position is closed before 5pm EST. On Wednesdays, the amount added or subtracted to an account as a result of rolling over a position tends to be around three times the usual amount. This "3-Day" rollover accounts for settlement of trades through the weekend period.
Notice: When trader is on a 2% margin account, you can have earnings on the daily rollover.
Example: When trader is on 2% margin and bought EUR/USD and the position is still open at 5pm EST, trader will earn the rollover.



Getting Started

With no commitment or cost, you can open a Virtual Forex Trading Account. The account has the full capabilities of a "real" account including live market rates, access to real-time market analysis, and the ability to execute trades off streaming prices. The virtual account (or Demo Account) gives you the ability to learn about the forex markets and test your trading skills without any risk.

How to Trade Your Forex Demo: Use this time to make a plan.



Choose the right currency pair. Find out based on your risk parameters, which currency is best suited for your trading style. Some may be too volatile and some to slow so decide which currency pair is most appropriate for your strategy and time frame.


Decide on how long you plan to stay in a trade. If you are an inter day trader, what is the average time of your trade, few minutes, couple of hours a full day, swing trade (couple of days to a week).


Before you enter a trade you should also have clear exit plan. Place your stops and limits accordingly.


Know how much you are willing to risk and how much you are looking to gain.
Keep track of important news and technical levels, which may be tested within your time frame.

Foreign exchange market


The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest market in the world, in terms of cash value traded, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The trade happening in the forex markets across the globe currently exceeds US$1.9 trillion/day (on average). Retail traders (individuals) are currently a very small part of this market and may only participate indirectly through brokers or banks and may be targets of forex scams.

Contents [hide]
1 Market size and liquidity
2 Market participants
2.1 Banks
2.2 Commercial companies
2.3 Central banks
2.4 Investment management firms
2.5 Hedge funds
2.6 Retail forex brokers
3 Trading characteristics
4 Factors affecting currency trading
4.1 Economic factors
4.2 Political conditions
4.3 Market psychology
5 Algorithmic trading in forex
6 Financial instruments
7 Speculation
8 Reference
9 See also
10 External links



Market size and liquidity
The foreign exchange market is unique because of:

its trading volume,
the extreme liquidity of the market,
the large number of, and variety of, traders in the market,
its geographical dispersion,
its long trading hours - 24 hours a day (except on weekends).
the variety of factors that affect exchange rates,
According to the BIS study Triennial Central Bank Survey 2004, average daily turnover in traditional foreign exchange markets was estimated at $1,880 billion. Daily averages in April for different years, in billions of US dollars, are presented on the chart below:

Global foreign exchange market turnover:

$621 billion spot
$1.26 trillion in derivatives, ie
$208 billion in outright forwards
$944 billion in forex swaps
$107 billion in FX options.
Exchange-traded forex futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts. Forex futures volume has grown rapidly in recent years, but only accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).

Average daily global turnover in traditional foreign exchange market transactions totalled $2.7 trillion in April 2006 according to IFSL estimates based on semi-annual London, New York, Tokyo and Singapore Foreign Exchange Committee data. Overall turnover, including non-traditional foreign exchange derivatives and products traded on exchanges, averaged around $2.9 trillion a day. This was more than ten times the size of the combined daily turnover on all the world’s equity markets. Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues such as internet trading platforms has also made it easier for retail traders to trade in the foreign exchange market.[1]

Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to IFSL estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 32.4% in April 2006. Other large centres include the US (with a 18.2% global share), Japan (7.6%) and Singapore (5.7%) (Chart 2). Most of the remainder was accounted for by trading in Germany, Switzerland, Australia, Canada, France and Hong Kong.

The ten most active traders account for almost 73% of trading volume, according to The Wall Street Journal Europe, (2/9/06 p. 20). These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually only 0-3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203. Minimum trading size for most deals is usually $100,000.

These spreads might not apply to retail customers at banks, which will routinely mark up the difference to say 1.2100 / 1.2300 for transfers, or say 1.2000 / 1.2400 for banknotes or travelers' checks. Spot prices at market makers vary, but on EUR/USD are usually no more than 5 pips wide (i.e. 0.0005). Competition has greatly increased with pip spreads shrinking on the major pairs to as little as 1 to 1.5 pips.




Finance series
Financial market
Financial market participants
Corporate finance
Personal finance
Public finance
Banks and Banking
Financial regulation


v d e
Top 10 Currency Traders % of overall volume, May 2006 Source: Euromoney FX survey[1] Rank Name % of volume
1 Deutsche Bank 19.26
2 UBS 11.86
3 Citigroup 10.39
4 Barclays Capital 6.61
5 Royal Bank of Scotland 6.43
6 Goldman Sachs 5.25
7 HSBC 5.04
8 Bank of America 3.97
9 JPMorgan Chase 3.89
10 Merrill Lynch 3.68



Unlike a stock market, where all participants have access to the same prices, the forex market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. As you descend the levels of access, the difference between the bid and ask prices widens. This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the forex market are determined by the size of the “line” (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail forex market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001-2004 period in terms of both number and overall size” Central banks also participate in the forex market to align currencies to their economic needs.


] Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account.

Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems, such as EBS, Reuters Dealing 3000 Matching (D2), the Chicago Mercantile Exchange, Bloomberg and TradeBook(R). The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.

Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.


Central banks
National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Milton Friedman argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high — that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.

The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives, however. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992-93 ERM collapse, and in more recent times in Southeast Asia.

Investment management firms
Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager with an international equity portfolio will need to buy and sell foreign currencies in the spot market in order to pay for purchases of foreign equities. Since the forex transactions are secondary to the actual investment decision, they are not seen as speculative or aimed at profit-maximization.

Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.


Hedge funds
Hedge funds, such as George Soros's Quantum fund have gained a reputation for aggressive currency speculation since 1990. They control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.

Retail forex brokers
Retail forex brokers or market makers handle a minute fraction of the total volume of the foreign exchange market. According to CNN, one retail broker estimates retail volume at $25-50 billion daily, which is about 2% of the whole market.


Trading characteristics
There is no single unified foreign exchange market. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currency instruments are traded. This implies that there is no such thing as a single dollar rate - but rather a number of different rates (prices), depending on what bank or market maker is trading. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs.

Top 6 Most Traded Currencies Rank Currency ISO 4217 Code Symbol
1 United States dollar USD $
2 Eurozone euro EUR €
3 Japanese yen JPY ¥
4 British pound sterling GBP £
5-6 Swiss franc CHF -
5-6 Australian dollar AUD $
The main trading centers are in London, New York, Tokyo, and Singapore, but banks throughout the world participate. As the Asian trading session ends, the European session begins, then the US session, and then the Asian begin in their turns. Traders can react to news when it breaks, rather than waiting for the market to open.

There is little or no 'inside information' in the foreign exchange markets. Exchange rate fluctuations are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes in GDP growth, inflation, interest rates, budget and trade deficits or surpluses, large cross-border M&A deals and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the large banks have an important advantage; they can see their customers' order flow.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.3045 dollar. Out of convention, the first currency in the pair, the base currency, was the stronger currency at the creation of the pair. The second currency, counter currency, was the weaker currency at the creation of the pair.

The factors affecting XXX will affect both XXX/YYY and XXX/ZZZ. This causes positive currency correlation between XXX/YYY and XXX/ZZZ.

On the spot market, according to the BIS study, the most heavily traded products were:

EUR/USD - 28 %
USD/JPY - 18 %
GBP/USD (also called sterling or cable) - 14 %
and the US currency was involved in 89% of transactions, followed by the euro (37%), the yen (20%) and sterling (17%). (Note that volume percentages should add up to 200% - 100% for all the sellers, and 100% for all the buyers).

Although trading in the euro has grown considerably since the currency's creation in January 1999, the foreign exchange market is thus far still largely dollar-centered. For instance, trading the euro versus a non-European currency ZZZ will usually involve two trades: EUR/USD and USD/ZZZ. The only exception to this is EUR/JPY, which is an established traded currency pair in the interbank spot market.


Factors affecting currency trading
See also: Exchange rates
Although exchange rates are affected by many factors, in the end, currency prices are a result of supply and demand forces. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.

Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. These elements generally fall into three categories: economic factors, political conditions and market psychology.


Economic factors
These include economic policy, disseminated by government agencies and central banks, economic conditions, generally revealed through economic reports, and other economic indicators.

Economic policy comprises government fiscal policy (budget/spending practices) and monetary policy (the means by which a government's central bank influences the supply and "cost" of money, which is reflected by the level of interest rates).

Economic conditions include:

Government budget deficits or surpluses: The market usually reacts negatively to widening government budget deficits, and positively to narrowing budget deficits. The impact is reflected in the value of a country's currency.

Balance of trade levels and trends: The trade flow between countries illustrates the demand for goods and services, which in turn indicates demand for a country's currency to conduct trade. Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. For example, trade deficits may have a negative impact on a nation's currency.

Inflation levels and trends: Typically, a currency will lose value if there is a high level of inflation in the country or if inflation levels are perceived to be rising. This is because inflation erodes purchasing power, thus demand, for that particular currency.

Economic growth and health: Reports such as gross domestic product (GDP), employment levels, retail sales, capacity utilization and others, detail the levels of a country's economic growth and health. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.

Political conditions
Internal, regional, and international political conditions and events can have a profound effect on currency markets.

For instance, political upheaval and instability can have a negative impact on a nation's economy. The rise of a political faction that is perceived to be fiscally responsible can have the opposite effect. Also, events in one country in a region may spur positive or negative interest in a neighboring country and, in the process, affect its currency.


Market psychology
Perhaps the most difficult to define[citation needed] (there are no balance sheets or income statements), market psychology and trader perceptions influence the foreign exchange market in a variety of ways:

Flights to quality: Unsettling international events can lead to a "flight to quality" -with investors seeking a "safe haven". There will be a greater demand, thus a higher price, for currencies perceived as stronger over their relatively weaker counterparts.

Long-term trends: Very often, currency markets move in long, pronounced trends.[citation needed] Although currencies do not have an annual growing season like physical commodities, business cycles do make themselves felt. Cycle analysis looks at longer-term price trends that may rise from economic or political trends.

"Buy the rumor, sell the fact:" This market truism can apply to many currency situations. It is the tendency for the price of a currency to reflect the impact of a particular action before it occurs and, when the anticipated event comes to pass, react in exactly the opposite direction. This may also be referred to as a market being "oversold" or "overbought".

Economic numbers: While economic numbers can certainly reflect economic policy, some reports and numbers take on a talisman-like effect - the number itself becomes important to market psychology and may have an immediate impact on short-term market moves. "What to watch" can change over time. In recent years, for example, money supply, employment, trade balance figures and inflation numbers have all taken turns in the spotlight.

Technical trading considerations: As in other markets, the accumulated price movements in a currency pair such as EUR/USD can form patterns that may be recognized and utilized by traders for the purpose of entering and exiting the market,[citation needed] leading to short-term fluctuations in price. Many traders study price charts in order to identify such patterns.






External links
Benchmark Currency Rates
CFTC Commission Advisory Customer fraud Protection
Federal Reserve daily update
Federal Reserve Bank of New York Foreign Exchange and related material.
Financial Times - currency market data
Forex Technical Publications

Advantages of Forex
Trade on Your Schedule
The single biggest advantage the forex market has over other markets is its 24-hour nature. A trader can put on or take off positions literally any time of day or night, regardless of their base of operations. That opens the game up to a great many individuals who might not otherwise have the time available to trade.

Consider, for example, the working person with a 9 to 5 type of job. Most folks like that cannot be expected to operate effectively as day traders in a market such as stocks. They just can't spend the requisite time watching the market during trading hours. With forex, though, one could theoretically day trade in the evenings after work, or in the mornings beforehand. The forex market is never really closed (yes, in some cases you can even trade on the weekend!).

No (or low) Transaction Costs
For most traders, the forex market also offers the benefit of no transaction costs. For the most part, forex brokers do not charge commissions (if they do, they are relatively small). There is, of course, the bid/offer spread, which can be viewed as a transaction cost, but the reality of the situation is that most traders buy at the offer and sell at the bid in whatever other market they trade, so that's really no different. Actually, the forex spreads can be quite small in the major currency pairs.

Low (or no) Account Minimums
Forex trading is also open to a wider trading demographic in that there are many opportunities to open smaller accounts than is the case in other markets. In fact, there is at least one broker which has no minimum account size. What's more, they also have no minimum trade size. That sort of flexibility opens the door to essentially anyone who wants to explore forex trading. This isn't to say that all brokers are that flexible. There are, however, a great many which offer so-called mini-contracts.

Multiple Trading Vehicles
Additionally, forex trading can be done in a number of fashions. Many folks tend to think strictly of the spot market. While that is certainly the largest of the components, it is not the only one. The futures market has become a bit more attractive with the expansion of e-mini currency contracts. There are futures options as well. What's more, an array of other option trading alternatives have been popping up, providing traders even more ways to take positions in the forex market.

Always Moving
One of the biggest attractions to forex trading is that there's just about always something moving. There are a number of primary currencies involved, each of which is continuously interacting with all the others. Chances are, at any given time, there is movement in at least one of those exchange rates based simply on the sheer volume of trading and the number of global news events providing impetus to action.

Easily Trade Long or Short
In the stock market there are restrictions imposed on selling short. In forex there is nothing of the sort. It is just as easy to taking a short position as it is to take a long one.

Disadvantages of Forex
No Exchange
The disadvantage to forex, some would say, is in the lack of an exchange system in forex trading. Some traders find comfort in knowing that there is a regulated mechanism backing their market participation. What's more, the lack of a centralized data point means the spot forex market does not have all the great add-on information stock and futures are used to seeing (volume, for example).

Complex Nature
In terms of market analysis techniques, technical analysis is just as useful in forex trading as in any other market - some might say more so. The thing that gives some traders concern. however, is the complexity of the fundamental side of the forex market. Currency exchange rates are influenced by a wide variety of factors, which can fluctuate over time.

Two-Sides to Every Position
By it's very nature, there are always two sides to the forex market, because currencies are quoted in terms of their value against each other. That means for any given exchange rate there are two countries (or region's) to take in to consideration. Sometimes issues related to one of the countries will dominate, while sometimes the other will. It can be quite fluid in that regard, which can sometimes lead to quite confusing reactions to news and events.

While these issues may seem like significant barriers to trading forex for some, the fact of the matter is that for most folks they are easily overcome. Just like any market, forex requires some getting used to. Once you do, though, it provides a wide array of opportunity.