Wednesday, September 30, 2009

Forex Market

Forex Market Hours
One of the main reasons why the forex market is so popular is because it is a 24 hour continuous market. Although the sessions on each of the separate exchanges generally open from 10AM to 6PM local time, they overlap each other like a relay race. Therefore, you can trade at any time and you can set your own hours. This is great for those who are not interested in a typical 9 to 5 job or for those who want to start trading on a part time basis.
Equal Opportunity Trading
The forex market is considered part of the Over The Counter, or OTC market, which means it doesn’t have a physical or central location. The forex market is run electronically within a network of banks and is made up of all participants that trade between themselves. The sheer size of the forex market makes it impossible for large investment or central banks to manipulate pricing for extended periods of time. This levels the playing field for all the average joe traders out there.
What it Means for You
Since there isn’t a centralized location and because there is little regulation of the forex market, there is heavy competition between different providers to attract the most traders and volume. It also means that the firm you trade with is your counterpart. The advantages are that you can trade directly with the market and that your transaction costs are kept down. The ability to make large profit off leverage is another advantage to the stock exchange. With some firms, you can trade or borrow up to 200 times the balance in your account. This means that a .5% move in the market can turn into a 100% gain.
The forex market is also popular because it doesn’t cost much to start trading. You have to be in it to win it, as some lotto slogans say. There are some online forex brokers that require as little as $10.00 to deposit in a trading account to get started. In the beginning, only large institutions could trade on the forex market; however the internet has made it possible for smaller investors to trade as well. Due to the popularity of online forex trading, the competition between online forex brokers is fierce. As a direct result, the minimum deposits to trade have now become very low.

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