All About Forex and Currency Trading

Forex, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another. Speculators in the FX market wish to purchase or sell one currency for another with the hope of making a profit when the value of the currencies changes in favor of the investor, whether from market news or events that take place in the world.

The Forex market has become the world's largest financial market, with over $1.9 trillion USD being traded on a daily basis. It is part of the bank-to-bank currency market known as the Interbank market. The 24-hour Interbank market literally follows the sun around the world, moving from major banking centers of the United States to Australia, New Zealand to the Far East, to Europe then back to the United States.

Market Hours

The spot FX market is unique to any other market in the world, as trading is available 24-hours a day. Somewhere around the world, a financial center is open for business, and banks and other institutions exchange currencies, every hour of the day and night with generally only minor gaps on the weekend. Essentially, foreign exchange markets follow the sun around the world, giving traders the flexibility of determining their trading day.

Time Zone

Tokyo Open

Tokyo Close

London Open

London Close

NY Open

NY Close

7:00 PM

4:00 PM

3:00 PM

12:00 PM

8:00 AM

5:00 PM

0:00

9:00

8:00

17:00

13:00

22:00

New York

GMT

Market Participants

Until recently, the Forex market wasn't accessible to the retail trader or individual speculator. With the large minimum transaction sizes and often-stringent financial requirements, banks, hedge funds, major currency dealers and the occasional high net-worth individual speculator were the principal participants. These large traders were able to take advantage of the many benefits offered by the Forex market versus other markets - including vast liquidity, 24-hour market access, and the strong trending nature of the world's primary currency exchange rates.

Trade with the 'Big Boys'

FX Universal, with its extensive network of relationships in the FX market, is now able to offer smaller transactional sizes (as small as 1000 units) and allow traders of almost any size, including individual speculators or smaller companies, the opportunity to trade the same rates and price movements as the large players who once dominated the Forex market.

Advantages of Forex vs. Stocks

Have you watched TV lately? Heard about a certain Telecomm stock and an analyst of a prestigious brokerage firm accused of keeping its recommendations, such as "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 that need the companies as clients. This catch-22 will never disappear. Foreign Exchange, as the prime market, generates billions in revenue for the world's banks and is a necessity of the global markets. Analysts in Foreign Exchange don't drive the deal flow, they just analyze the Forex market.Equity traders rely on key fundamental and technical data when making assessments of a particular company’s future growth and performance. Just the same, similar factors are considered when gauging the overall health of a country’s economy and currency. Currency valuation is a function of supply and demand. Namely, factors such as interest rate movements, economic indicators such as GDP, foreign investment, and the trade balance all provide an indication of the general health of an economy and underlying shifts in the supply and demand for that currency. As a basic example, consider an interest rate decision by a country’s central bank. If a rate is hiked, it is expected that capital flows into that country may increase, as investors may seek to realize a greater return on their investment in that country versus others. As more capital flows into the country, the demand for its currency increases - which generally causes an appreciation of that currency.

Simply put: no commissions, no clearing fees, no exchange fees, no government fees, and no brokerage fees. There may be different names for different fees at different places. But, in Spot currencies at FX Universal, no commissions means just that:

COMMISSIONS.

There are approximately 4,500 stocks listed on the New York Stock exchange. Another 3,500 are listed on the NASDAQ. Which one will you trade? Got the software? Got the time? In Spot currency trading, you have 4 major markets, 24 hours a day 5.5 days a week. Concentrate on the majors; find your trade. You have approximately 34 second-tier currencies to look at in your spare time (if you are so inclined).

One of the main advantages for traders trading Spot currencies with FX Universal is the leverage capability afforded to them. With margin policies as lenient as .5%, a trader is able to leverage up to 200:1. That is, a trader can control a $100,000 position for only $50. Keep in mind however, leverage is a double-edged sword and you should try to avoid overleveraging, as it magnifies both profits and losses.

DayTrader’s Dream – A Bull Market Either Way

Due to the short-selling restrictions in the stock markets, it is not uncommon for daytraders to have a difficult time finding profitable trades in a downward moving market. Although daytraders have tried to circumvent these barriers by using derivatives such as ‘bullets’ and the like, the associated costs are often burdensome. Equity traders are subsequently left with missed opportunities or very high transaction costs.In contrast, the Forex market has no restrictions on short selling. Since every transaction in the Forex market involves the buying of one currency and the simultaneous selling of another, it is a bull-market either way. For example, if you wanted to go long the EUR/USD, you would be buying the base currency, which is the EUR, and paying for it in terms of the counter currency, by selling the USD. Conversely, if you wanted to short the pair, you would be selling the base currency, which is the EUR, and paying for it in terms of the counter currency, by buying USD. In both examples, a currency was being bought; there is no negative connotation associated with short selling in the Forex market.

	Forex	Stocks
Average Notional Volume Traded	$1.9 Trillion Daily	$60 Billion Daily
Commission-Free Trading	Yes	No
Short-Selling on a Downward Move	Yes	No (Uptick selling restrictions)
24-Hour Market Liquidity	Yes	Limited Products
Elimination of Middlemen	Yes	No
Up to 200:1 Leverage	Yes	No
No Slippage on Client Orders	Yes	No

Advantages of Forex vs. Futures

Terminology

	Forex	Futures
Average Notional Volume Traded	$1.9 Trillion Daily	$30 Billion Daily
Instantaneous Execution	Yes	No
Commission-Free Trading	Yes	No
24-Hour Market Liquidity	Yes	No
Up to 200:1 Leverage	Yes	No
No Slippage on Client Orders	Yes	No

Get Your Passport to Wealth

When you trade currencies, you don't actually hold the physical cash, of course. Your home office will not look like a Swiss vault. But, you do get the same sense of stored wealth. Plus, there's a solid feeling of security that comes from knowing you're controlling the most fluid and coveted symbol of value throughout the world: CASH. Money drives the world. Should a rise or decline in a particular currency be apparent, 4X GENIE will reveal its path and thus position you to capitalize on the opportunity. Rest assured, you can make money as currencies rise or fall against each other because it's the movement created by supply and demand forces and how you position yourself that creates your profit potential.

The(spot) FOREX market may be the investment world's best-kept secret. You get high liquidity, high profit potential, high flexibility because of the FOREX hours of operation, and amazing leverage.