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Forex vs Other Markets

"Stocks"

No Middlemen

Centralized exchanges provide many advantages to the trader. However, one of the problems with any centralized exchange is the involvement of middlemen. Any party located between the trader and the buyer or seller of the security or instrument will add additional cost to the transaction, either in time or in fees. Spot currency trading does away with the middlemen and allows traders to interact directly with the market maker responsible for the pricing on a particular currency pair. Quicker access, cheaper costs.

Market Manipulation

How many times have you heard that "fund A" was selling "X" or buying "Z"; Rumor had it that the funds were taking profits because of the end of the financial year or because today is "triple witching day", all as an explanation of why this stock is up or the market in general is up or down on the session. No matter what your broker says, the stock market is very susceptible to large funds buying and selling, and it is not uncommon for a fund to "run" a particular issue for a few days. In spot currency trading the vast liquidity of the market makes the likelihood of any one fund or bank manipulating a particular currency very slim.

At the Mercy Of Analysts And Corporate Scandal

Have you watched TV lately? Heard about the accounting scandals from Enron to WorldCom and Refco? Have you seen how a certain analyst of a prestigious brokerage firm was accused of keeping their recommendations a "BUY" when the stock was rapidly declining? It is the nature of these relationships. No matter what the government does to step in and discourage this type of activity, we have not heard the last of it. IPO's are big business for both the companies going public and the brokerage houses. Relationships are mutually beneficial and analysts work for the brokerage houses which need the companies as clients. This catch-22 will never disappear. The Foreign Exchange (Forex), generates billions in revenue for the world's banks and is a necessity of the global markets. Analysts in foreign exchange don't drive or inhibit the market flow, they only analyze.

Stocks Vs Major Currencies

There are tens of thousands of stocks listed on the worlds major stock exchange’s. Which one will you trade? In currency trading there are 8 major currencies traded 24 hours a day 5.5 days a week. There are also approximately 34 2nd tier currencies. Our trading teams concentrate on the majors.

“Futures”

Highly Trending Markets

Because the foreign exchange market does not close, it isn't dramatically impacted by buying programs and cannot 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, 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 futures markets.

Leverage

Trading in the spot currency market offers advantages over trading currency futures contracts. One of the main advantages to trading spot currencies is the margin rate or leverage that is available. In spot currency trading the trader receive one margin rate for trades done 24 hours a day. In currency futures the trader has one margin rate for "day" trades and one margin rate for "overnight" positions. Spot currency trading gives the trader one rate all the time so they 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 rarely experiences periods of illiquidity. Any trader in any time zone can trade Forex at any time during the day or night! Forex traders 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, 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. Forex traders are no longer limited to trading the comparatively short trading day offered by US markets alone.