With Eurex launching currency futures contracts on Sept. 23, which will compete with the Chicago Mercantile Exchange's (CME) currency contracts, Eurex will become more than a direct competitor against the CME, it'll be another option in the wide world of foreign exchange. While currency futures contracts and currencies traded on the OTC forex market are not the same thing, many say they're close enough. In fact the futures prices and the spot prices move in parallel.
While the OTC forex market used to be the only way to trade forex and was only used by big traders, technology and competition has brought the market to retail accounts. The CME has been offering currency futures since 1972.
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Forex Trading - A Simple Explanation for a Complex Trading Strategy
Getting Started in FOREX Options
A Primer on the FOREX Market
Forex Research - Some Tips to Help Make the Right Choice
"The [currency] futures have been around for a while but futures have been around for less time than the [OTC] cash FX market," says Gleiin Stevens, managing director at Gain. "The difference here is that in the last five years in particular the retail product and the retail user has seen a more viahle two options. Some time ago the only option for a retail user, other than going through a private bank, was to use the futures. In the last five years there's been a better opportunity for the individual. Now he's got two choices."
Michael Stumm, president of Oanda, agrees on that timeline. "The forex market has been growing substantially. Five years ago there was no such thing as a retail forex market and today it's large and growing very quickly, and because of the gaining popularity and higher volumes, the exchanges want to be a part of that. And that's why [Eurex is] introducing currency futures," Stumm says.
Alex De Khtyar, founder and president of Fini FX adds, "The industry is so different today because you can open an account with $1,000, and some firms offer mini accounts and you could open an account with even $300."
There's a lot of jargon that goes with forex and it's hard to compare the OTC market with exchange traded contracts without understanding the main terms. Simply put, the interbank, cash and spot are all part of the OTC foreign exchange market; and exchange-traded currencies are forex futures contracts traded on a regulated exchange. The interbank market is literally the market between the major dealer banks. "Cash market" is another term for foreign exchange and usually refers to a market in foreign currencies made by large banks, but now includes diverse participants. Cash forex do not trade to a contract date, the position is rolled every day if you have one. Spot forex transactions are those that settle two days after they are entered as opposed to an agreement to make a transaction some time in the future, like a forward, an option or a future.
"The currency futures contracts being launched by Eurex are very similar to those already trading at the CME," says John H. Eley, president and CEO at hotspot Fx, a forex broker. "They are traditional futures contracts, standard contract [specifications], cleared through [a] clearing corporation. The interbank foreign exchange is the traditionally spot market, which is an OTC market as opposed to a listed contract and it's uncleared, so each of the counterparties are extending credit to each other."
The primary difference, according to Stumm, is that futures get traded on regulated trading floors or through electronic matching engines and you go through a quasi central site with oversight.
"With futures, you can always calculate what the spot price is, and anything you can do with spot you can, in theory, do with futures and vice versa," Stumm says.
"The futures product is an exchange rate at a price agreed on today for which settlement occurs at some later time," Stumm says. "They are effectively quoted the same and if you want to hedge you can do it with either market. In some sense the spot market is an unregulated market, it's more OTC and it's a little more cowboyish in a sense. Regulated markets will have certain rules, like they'll specify the number of units you can trade in, whereas on spot there's more flexibility in unit size. With Oanda you could buy $23 spot EUR/USD, which you couldn't do with futures because it's too small an amount to bring over an exchange."
The size differences can make a difference for hedgers. "A company with a European client may be getting a payment from that client in two months of $145,000," Stumm says. "On the futures exchange you can't trade $145,000 to hedge that amount, but on the spot market you can."
Stevens says the CME's currency futures product mirrors its other products in terms of standardization and being deliverable. "That works well if you're a farmer hedging a particular product," Stevens say. "Where it doesn't work as well is for the retail speculator or the small money manager who wants to be able to get in and out of the market with plenty of liquidity, price discovery and a fluid market that runs 24 hours, which echoes more the interbank market."
The difference in liquidity between OTC and futures depends on what pair you want to trade and the CME routinely provide narrow spreads with ample liquidity for retail traders despite Stevens' claims.
source;findarticles
Wednesday, February 25, 2009
evolution of retail forex
Foreign exchange trading, once only for big players, has become more mainstream, attracting retail traders from around the world. Firms offering forex are playing their part by meeting the needs of these less-experienced newcomers.
Forex firms agree that retail clients in the foreign exchange market are increasing at a rapid rate and will only continue to do so. Firms are trying to be attentive to the needs of these new traders, hoping to capture some of those prospective customers.
From wireless trading to fractional pips and competition to tighten spreads, retail traders can expect a lot more for a lot less going forward.
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Getting Started in FOREX Options
A Primer on the FOREX Market
Forex Research - Some Tips to Help Make the Right Choice
"The majority of the people out there now in forex trading have experience in foreign exchange trading, but a lot of the people that are gradually moving over are looking to test the marketplace, and we're seeing an increasing number of inquiries from people without experience," says Enis Mehmet, head of CMC Group's New York operation.
A broader acceptance of forex trading is partially fueling that growth.
"Overall, the forex market has become much more mainstream over the past several years," says Mark Galant, CEO and founder of Gain Capital. "Both self-directed traders as well as passive investors are now allocating risk capital to forex."
Galant says Gain now has clients in more than 110 countries and that its managed account program has seen a substantial increase in assets under management in the past year.
"[Forex] is no longer a completely unknown market," says Marc Prosser, chief marketing officer at Forex Capital Markets (FXCM). He says FXCM has seen more than 100% growth per year in customers in recent years.
Some unique features of forex are what make it attractive to some traders.
"It is a great alternative to other markets because it offers greater liquidity and 24-hour trading, among other benefits," says Eugene Hawkin, the chief operating officer at Capital Market Services. "In addition, increased regulation has made it a more legitimate option in the eyes of many traders, and the spread of readily available technology has made it more accessible than ever to the average trader."
Some say that despite the large growth in forex, that there is much more to come.
"The potential is just untapped, in terms of the market for forex," says Joe Nickolson, president and chief operating officer at TradeStation Securities.
TradeStation Securities has recently added forex to its offerings in an effort to capture some of that market. While TradeStation is known for the system-testing and automatic execution capabilities of its futures and equities execution platform, that technology is not yet implemented on the forex side, although Nickolson says it is in development.
"Certainly, people who trade futures and equities are perfect candidates because there's much greater leverage. Anyone who trades actively - forex is one of the best markets for them," Nickolson says.
For those active traders, the constant movement in forex, on all time frames, provides ample trading opportunities.
"Because the stock market has seen very little movement in the past six months, what we're seeing is a lot of crossover from people that have been previously trading stocks on a regular basis that are now looking to diversify their trading portfolios and that includes foreign exchange," Mehmet says. "These clients are coming on board and looking for [the brokerage firm they use] to give them guidance."
It can be difficult for a retail trader who's never traded forex, even if he's experienced in trading other markets, to just jump in, however, especially when he doesn't understand the way trading the forex market works.
"The main hurdle is education. This remains a very unfamiliar market to many retail traders, and education is the key to help them become comfortable and to overcome their natural reluctance to try something new," says Dan O'Neil, principal at Xpresstrade.
"Customer service, the ability of a retail client to pick up a phone or click onto an online chat and speak to a knowledgeable individual who can anticipate their client's needs has become more vital than ever," says Bill Hoerter, chief FX dealer at Alaron FX.
Understanding the costs of trading forex, which often is based on a disclosed bid/ask spread, is one knowledge hurdle faced by traders used to commission-based charges.
"What we're seeing is that these clients are being offered price guarantees through advertising and they're not getting what they're seeing," Mehmet says. He says that some firms will claim to offer three-pip spreads on the EUR/USD and what's not made clear is that it is based on a $100,000 minimum trade size. "So when the smaller clients that will open an account with $500 look to trade around the $10,000 [lot size] mark, they will get offered five pip spreads on the euro and not three."
Sometimes traders will only be allowed to trade at a certain pip spread according to the amount of their trading account, or based on a certain time of day.
source;Findarticles
Forex firms agree that retail clients in the foreign exchange market are increasing at a rapid rate and will only continue to do so. Firms are trying to be attentive to the needs of these new traders, hoping to capture some of those prospective customers.
From wireless trading to fractional pips and competition to tighten spreads, retail traders can expect a lot more for a lot less going forward.
Related Results
Getting Started in FOREX
Forex Trading - A Simple Explanation for a Complex Trading Strategy
Getting Started in FOREX Options
A Primer on the FOREX Market
Forex Research - Some Tips to Help Make the Right Choice
"The majority of the people out there now in forex trading have experience in foreign exchange trading, but a lot of the people that are gradually moving over are looking to test the marketplace, and we're seeing an increasing number of inquiries from people without experience," says Enis Mehmet, head of CMC Group's New York operation.
A broader acceptance of forex trading is partially fueling that growth.
"Overall, the forex market has become much more mainstream over the past several years," says Mark Galant, CEO and founder of Gain Capital. "Both self-directed traders as well as passive investors are now allocating risk capital to forex."
Galant says Gain now has clients in more than 110 countries and that its managed account program has seen a substantial increase in assets under management in the past year.
"[Forex] is no longer a completely unknown market," says Marc Prosser, chief marketing officer at Forex Capital Markets (FXCM). He says FXCM has seen more than 100% growth per year in customers in recent years.
Some unique features of forex are what make it attractive to some traders.
"It is a great alternative to other markets because it offers greater liquidity and 24-hour trading, among other benefits," says Eugene Hawkin, the chief operating officer at Capital Market Services. "In addition, increased regulation has made it a more legitimate option in the eyes of many traders, and the spread of readily available technology has made it more accessible than ever to the average trader."
Some say that despite the large growth in forex, that there is much more to come.
"The potential is just untapped, in terms of the market for forex," says Joe Nickolson, president and chief operating officer at TradeStation Securities.
TradeStation Securities has recently added forex to its offerings in an effort to capture some of that market. While TradeStation is known for the system-testing and automatic execution capabilities of its futures and equities execution platform, that technology is not yet implemented on the forex side, although Nickolson says it is in development.
"Certainly, people who trade futures and equities are perfect candidates because there's much greater leverage. Anyone who trades actively - forex is one of the best markets for them," Nickolson says.
For those active traders, the constant movement in forex, on all time frames, provides ample trading opportunities.
"Because the stock market has seen very little movement in the past six months, what we're seeing is a lot of crossover from people that have been previously trading stocks on a regular basis that are now looking to diversify their trading portfolios and that includes foreign exchange," Mehmet says. "These clients are coming on board and looking for [the brokerage firm they use] to give them guidance."
It can be difficult for a retail trader who's never traded forex, even if he's experienced in trading other markets, to just jump in, however, especially when he doesn't understand the way trading the forex market works.
"The main hurdle is education. This remains a very unfamiliar market to many retail traders, and education is the key to help them become comfortable and to overcome their natural reluctance to try something new," says Dan O'Neil, principal at Xpresstrade.
"Customer service, the ability of a retail client to pick up a phone or click onto an online chat and speak to a knowledgeable individual who can anticipate their client's needs has become more vital than ever," says Bill Hoerter, chief FX dealer at Alaron FX.
Understanding the costs of trading forex, which often is based on a disclosed bid/ask spread, is one knowledge hurdle faced by traders used to commission-based charges.
"What we're seeing is that these clients are being offered price guarantees through advertising and they're not getting what they're seeing," Mehmet says. He says that some firms will claim to offer three-pip spreads on the EUR/USD and what's not made clear is that it is based on a $100,000 minimum trade size. "So when the smaller clients that will open an account with $500 look to trade around the $10,000 [lot size] mark, they will get offered five pip spreads on the euro and not three."
Sometimes traders will only be allowed to trade at a certain pip spread according to the amount of their trading account, or based on a certain time of day.
source;Findarticles
Forex trading and education in one place
Forex trading has found its way onto the screens of many traders looking for alternatives to interest rate and stock indexes, but like any market, trading forex requires research, reliable quotes and education. Many forex platforms offer multiple services including trading education.
One such platform, http://www.finifx.com/, was launched in mid 2005 after five years of preparation, offering multiple resources for new and experienced forex traders.
The Fini Fx Pro trading platform is an Internet-based currency trading system for self directed and managed forex trading. The platform provides traders, trading advisers, pool operators and brokers with the tools for account management and trade execution on major currency pairs.
Related Results
Getting Started in FOREX
Forex Trading - A Simple Explanation for a Complex Trading Strategy
Getting Started in FOREX Options
A Primer on the FOREX Market
Forex Research - Some Tips to Help Make the Right Choice
The Fini Fx Pro's features include real-time quotes, one click execution and anytime online account monitoring. The platform interface includes trade execution windows and a chart constructor. The platform allows you to apply analytical indicators and drag and drop chart options.
There is also an all in one provision in the Quote Window to set up stop loss/take profit in points, which can be assigned to any order. The Context Help System provides users with on-demand help within every section of the trading platform. There's an automated back-office online and real-time account reporting facility with all reports available to clients. While monitoring fluctuations in currency prices, traders depend greatly on accurate quote information and the Fini Fx Pro trading platform offers real-time currency price feed through connectivity to the global forex marketplace.
Fini Fx allows traders to execute trades from multiple areas including the Quote Window, Trade Window, Full Screen Window and Toolbar. This means that when the currency you are tracking hits a determined target price you can execute the trade instantly from any of the "trade executable enabled" windows without being delayed from having to click back to the primary trade window.
EDUCATION
Alex De Khtyar president of Fini Fx, says education is important for traders, which is why his Web site is more than just a platform. Educational tools on his site include a history of forex, charts and technical indicators and trade execution lessons in a multi-media based software. There is also a demo trading platform to help traders understand the forex marketplace and begin executing currency trades.
"We have our Forex Academy, which focuses on giving a person who's just starting out in forex the foundation, all the basic principles of what this market is all about. We cover the understanding of fundamental and technical analysis and risk and money management," De Khtyar says.
"Fini Fx Academy is not just like a book on a CD you just read. It's an interactive software with 21 lessons with quizzes and a final exam with 108 questions," De Khtyar says. The Fini Fx Academy costs $299.
DEMO ACCOUNT
Traders can open a demo account, view statistics and evaluate their performance and trading strategies.
"We have a demo that is free for 30 days, which can be extended up to 90 days, that teaches traders how to use our platform with 15 animated lessons. Our demo teaches the theory behind trading forex and allows users to practice it before they get into it with their own money," he says.
"The Fini Fx demo account provides actual live forex market quotes, charts and streaming news so that you can exercise your trading skills and evaluate trading strategies under real market conditions with no risk. The demo account gives traders access to the identical Fini Fx Pro trading platform features including real-time quotes, technical analysis tools, news feed and a built in Web browser.
Another forex platform that offers similar tools, but for the more experienced trader, is TGForex.com, which offers a free technical analysis program for forex traders at http://www.tgforex.com/.
Users can evaluate the results of several different trading programs in a highly interactive graphical environment. The on-screen graphs and reports update to show how changes to such things as moving average periods and stop placement affect profits.
The simulator uses recent data from eight different currency pairs and currently has four basic trading algorithms builtin: single moving average, moving average crossover, triple moving average and high-low channel.
Another forex platform that offers resources is AlaronFx at http://www.alaronfx.com/. On its Web site you can find trading guides, forex research with a forex outlook and forex news.
Alaron also provides a free demo account for 30 days. The demo account allows you to test your trading system and theories, gain confidence trading forex online and benefit from built-in risk management. You also will receive real-time streaming quotes, charts and news, which are available on its Internet-based trading platform.
AlaronFx's forex platform offers 24-hour forex trading at interbank spreads. AlaronFX also offers research, online spot fx, cash metals and EFPs. It services Introducing brokers, money managers, futures commission merchants, and managed retail and institutional accounts.
source;findarticles
One such platform, http://www.finifx.com/, was launched in mid 2005 after five years of preparation, offering multiple resources for new and experienced forex traders.
The Fini Fx Pro trading platform is an Internet-based currency trading system for self directed and managed forex trading. The platform provides traders, trading advisers, pool operators and brokers with the tools for account management and trade execution on major currency pairs.
Related Results
Getting Started in FOREX
Forex Trading - A Simple Explanation for a Complex Trading Strategy
Getting Started in FOREX Options
A Primer on the FOREX Market
Forex Research - Some Tips to Help Make the Right Choice
The Fini Fx Pro's features include real-time quotes, one click execution and anytime online account monitoring. The platform interface includes trade execution windows and a chart constructor. The platform allows you to apply analytical indicators and drag and drop chart options.
There is also an all in one provision in the Quote Window to set up stop loss/take profit in points, which can be assigned to any order. The Context Help System provides users with on-demand help within every section of the trading platform. There's an automated back-office online and real-time account reporting facility with all reports available to clients. While monitoring fluctuations in currency prices, traders depend greatly on accurate quote information and the Fini Fx Pro trading platform offers real-time currency price feed through connectivity to the global forex marketplace.
Fini Fx allows traders to execute trades from multiple areas including the Quote Window, Trade Window, Full Screen Window and Toolbar. This means that when the currency you are tracking hits a determined target price you can execute the trade instantly from any of the "trade executable enabled" windows without being delayed from having to click back to the primary trade window.
EDUCATION
Alex De Khtyar president of Fini Fx, says education is important for traders, which is why his Web site is more than just a platform. Educational tools on his site include a history of forex, charts and technical indicators and trade execution lessons in a multi-media based software. There is also a demo trading platform to help traders understand the forex marketplace and begin executing currency trades.
"We have our Forex Academy, which focuses on giving a person who's just starting out in forex the foundation, all the basic principles of what this market is all about. We cover the understanding of fundamental and technical analysis and risk and money management," De Khtyar says.
"Fini Fx Academy is not just like a book on a CD you just read. It's an interactive software with 21 lessons with quizzes and a final exam with 108 questions," De Khtyar says. The Fini Fx Academy costs $299.
DEMO ACCOUNT
Traders can open a demo account, view statistics and evaluate their performance and trading strategies.
"We have a demo that is free for 30 days, which can be extended up to 90 days, that teaches traders how to use our platform with 15 animated lessons. Our demo teaches the theory behind trading forex and allows users to practice it before they get into it with their own money," he says.
"The Fini Fx demo account provides actual live forex market quotes, charts and streaming news so that you can exercise your trading skills and evaluate trading strategies under real market conditions with no risk. The demo account gives traders access to the identical Fini Fx Pro trading platform features including real-time quotes, technical analysis tools, news feed and a built in Web browser.
Another forex platform that offers similar tools, but for the more experienced trader, is TGForex.com, which offers a free technical analysis program for forex traders at http://www.tgforex.com/.
Users can evaluate the results of several different trading programs in a highly interactive graphical environment. The on-screen graphs and reports update to show how changes to such things as moving average periods and stop placement affect profits.
The simulator uses recent data from eight different currency pairs and currently has four basic trading algorithms builtin: single moving average, moving average crossover, triple moving average and high-low channel.
Another forex platform that offers resources is AlaronFx at http://www.alaronfx.com/. On its Web site you can find trading guides, forex research with a forex outlook and forex news.
Alaron also provides a free demo account for 30 days. The demo account allows you to test your trading system and theories, gain confidence trading forex online and benefit from built-in risk management. You also will receive real-time streaming quotes, charts and news, which are available on its Internet-based trading platform.
AlaronFx's forex platform offers 24-hour forex trading at interbank spreads. AlaronFX also offers research, online spot fx, cash metals and EFPs. It services Introducing brokers, money managers, futures commission merchants, and managed retail and institutional accounts.
source;findarticles
Forex FCM report.(Guide to e-Forex)
While Forex trading is not new -to the marketplace, many retail traders are new to forex, and forex brokerage firms that targeted retail traders have been around for some time. Unfortunately, the forex arena hasn't always been the safest for individuals. But this is changing - for the better.
The CFTC has spent much of the last several years cracking down hard on illegal forex brokerage firms, and it continues to do so. While retail clientele must be ever vigilant when selecting those they conduct business with, the result of this crackdown has been that traders now can feel safe participating in the potentially lucrative electronic forex markets.
Related Results
Getting Started in FOREX
Forex Trading - A Simple Explanation for a Complex Trading Strategy
Getting Started in FOREX Options
A Primer on the FOREX Market
Forex Research - Some Tips to Help Make the Right Choice
Legitimate firms have been responding in kind. Some are offering a gamut of services, including miniforex accounts that traders in traditional futures long have taken for granted. Continually increasing legitimacy thanks to tougher regulations and smaller account requirements should fuel forex's continued growth.
One thing those new to forex trading may not be familiar with is the difference between an e-forex broker and a regular futures broker.
"An e-forex broker is an [FCM] and is regulated in the same manner as a regular futures broker," says Barry E. Calder, SVP at forex FCM hotspot FX. "In e-forex, however, there is a distinction between brokers that execute client trades on a pure brokerage or agency basis for a commission, like traditional FCMs, and e-forex brokers who have proprietary desks that trade against their client orders and hold positions."
Calder says the first agency model is closer to the futures exchange model where the client pays a negotiated brokerage commission and deals on the best price in the market, or enters his own bids and offers. The second model is less transparent in terms of market structure and trading costs. Almost all forex firms, however, do not charge commissions for trades.
When you trade futures, the broker delivers your order to the exchange, and makes sure your order is matched up against some other trader's. For this service, the broker charges a commission. It's different with forex brokers.
"When you trade forex, the broker really should be described as a dealer," says Dan O'Neil, principal at Xpresstrade. "The dealer acts as your counterpart in every transaction and hopes to earn a profit by quickly closing out each position in a subsequent trade with another client, or by quickly entering into an equal and opposite trade with another currency dealer."
In the futures world, the broker tries to get the order executed against that of another trader. In the forex world, the broker acts as a dealer or market maker, and actually takes the other side of the trade.
"A forex broker offers trading in actual, physical currencies," O'Neil says. "When you trade forex, you're actually buying and selling real currency in the spot, or cash, market, and you have to make delivery of the currency or take delivery of the currency in two business days."
A futures broker, by contrast, offers trading in futures on currencies as well as on a variety of other products. When you trade a futures contract, you're entering into a contract to buy or sell the underlying commodity at some point in the future - often months from when the trade is placed.
While neither the National Futures Association nor the CFTC will provide an official list of forex-only regulated firms, Futures has tracked down the main players to get an idea of their experience, flexibility and customer support. The table on page 33 includes two lists: forex-only firms and futures and forex firms.
Forex-only firms, such as CMC forex, are ranked here by adjusted net capital. Firms offering trading in both cash or eforex and futures, such as the the Chicago Mercantile Exchange's forex futures and soybeans, are not included in the forex-only ranking because their futures-related capital does not necessarily reflect just forex market activity. Firms offering both futures and forex are listed separately in alphabetical order.
SETTING UP AN E-FOREX ACCOUNT
A potential client goes through similar steps in opening an e-forex account that they would go through in opening a regular futures account. Steps include:
* Researching and the services and reputation of several e-forex brokers.
* Completing a due diligence review of those firms that meet your initial criteria for selection.
* Filling out account papers. In many cases, all the material can be filled out online. However, if your broker requires a copy of a photo ID, that may have to be faxed or mailed.
* Funding the account. This generally can be done online or within a couple of days by certified check.
* Learning how to use the trading platform. While futures brokers often use similar order entry screens, many times ones re-branded from the same software company, because forex brokers are the dealers themselves and don't have to meet exchange technology standardization, every order entry system can be different.
In researching e-forex brokers, clients should use the same criteria they apply to any broker, including reputation, services provided, costs and leverage allowed.
sourc; findarticles
The CFTC has spent much of the last several years cracking down hard on illegal forex brokerage firms, and it continues to do so. While retail clientele must be ever vigilant when selecting those they conduct business with, the result of this crackdown has been that traders now can feel safe participating in the potentially lucrative electronic forex markets.
Related Results
Getting Started in FOREX
Forex Trading - A Simple Explanation for a Complex Trading Strategy
Getting Started in FOREX Options
A Primer on the FOREX Market
Forex Research - Some Tips to Help Make the Right Choice
Legitimate firms have been responding in kind. Some are offering a gamut of services, including miniforex accounts that traders in traditional futures long have taken for granted. Continually increasing legitimacy thanks to tougher regulations and smaller account requirements should fuel forex's continued growth.
One thing those new to forex trading may not be familiar with is the difference between an e-forex broker and a regular futures broker.
"An e-forex broker is an [FCM] and is regulated in the same manner as a regular futures broker," says Barry E. Calder, SVP at forex FCM hotspot FX. "In e-forex, however, there is a distinction between brokers that execute client trades on a pure brokerage or agency basis for a commission, like traditional FCMs, and e-forex brokers who have proprietary desks that trade against their client orders and hold positions."
Calder says the first agency model is closer to the futures exchange model where the client pays a negotiated brokerage commission and deals on the best price in the market, or enters his own bids and offers. The second model is less transparent in terms of market structure and trading costs. Almost all forex firms, however, do not charge commissions for trades.
When you trade futures, the broker delivers your order to the exchange, and makes sure your order is matched up against some other trader's. For this service, the broker charges a commission. It's different with forex brokers.
"When you trade forex, the broker really should be described as a dealer," says Dan O'Neil, principal at Xpresstrade. "The dealer acts as your counterpart in every transaction and hopes to earn a profit by quickly closing out each position in a subsequent trade with another client, or by quickly entering into an equal and opposite trade with another currency dealer."
In the futures world, the broker tries to get the order executed against that of another trader. In the forex world, the broker acts as a dealer or market maker, and actually takes the other side of the trade.
"A forex broker offers trading in actual, physical currencies," O'Neil says. "When you trade forex, you're actually buying and selling real currency in the spot, or cash, market, and you have to make delivery of the currency or take delivery of the currency in two business days."
A futures broker, by contrast, offers trading in futures on currencies as well as on a variety of other products. When you trade a futures contract, you're entering into a contract to buy or sell the underlying commodity at some point in the future - often months from when the trade is placed.
While neither the National Futures Association nor the CFTC will provide an official list of forex-only regulated firms, Futures has tracked down the main players to get an idea of their experience, flexibility and customer support. The table on page 33 includes two lists: forex-only firms and futures and forex firms.
Forex-only firms, such as CMC forex, are ranked here by adjusted net capital. Firms offering trading in both cash or eforex and futures, such as the the Chicago Mercantile Exchange's forex futures and soybeans, are not included in the forex-only ranking because their futures-related capital does not necessarily reflect just forex market activity. Firms offering both futures and forex are listed separately in alphabetical order.
SETTING UP AN E-FOREX ACCOUNT
A potential client goes through similar steps in opening an e-forex account that they would go through in opening a regular futures account. Steps include:
* Researching and the services and reputation of several e-forex brokers.
* Completing a due diligence review of those firms that meet your initial criteria for selection.
* Filling out account papers. In many cases, all the material can be filled out online. However, if your broker requires a copy of a photo ID, that may have to be faxed or mailed.
* Funding the account. This generally can be done online or within a couple of days by certified check.
* Learning how to use the trading platform. While futures brokers often use similar order entry screens, many times ones re-branded from the same software company, because forex brokers are the dealers themselves and don't have to meet exchange technology standardization, every order entry system can be different.
In researching e-forex brokers, clients should use the same criteria they apply to any broker, including reputation, services provided, costs and leverage allowed.
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Learn Some of the Best Online Forex Trading Strategies Available To Use
For you to become successful in online forex trading, you need to be well familiar with some strategies that can be considered highly dependable and at the same time, can be implemented outright if needed. Your familiarity with these strategies will actually be the determining factors whether you make a profit or you just turn out to be another loser in this supremely analytical game of profit making. It is therefore of extreme importance that you be fully knowledgeable first with these strategies before plunging your way into the world of online forex trading or online currency trading.Familiarizing with The most Common Forex Trading Strategies AvailableBeing familiar with the best forex trading strategies will be very advantageous on your part, this will keep you on the positive side of things and can actually help you achieve greater profits in the shortest possible time. As an investor, there are various kinds of strategies available for you that can easily be taken advantage of. One well known strategy being used by the already veteran forex traders is the strategy called "leverage".This is how this strategy works. Basically, it lets an online currency trader to avail of more funds than his actual deposit amount. Through this strategy, you can take full advantage of forex trading benefits. The leverage forex trading strategy will allow you to utilize your funds as much as one hundred times that of your deposit amount. This will now give you bigger chances of achieving a much favorable outcome in your forex trading. Professional forex investors make use of the leverage forex trading strategy on a regular basis. It allows them to actually take advantage of the sudden occurrence of changes or short term fluctuations in the forex market.The next forex trading strategy that is also used quite often by investors is the strategy known as stop-loss order. This strategy is really helpful for investors as it actually helps them prevent possible losses due to wrongful decisions. It actually lets the investor set a predetermined loss margin. If the currencies you are trading go beyond your set limit, then your order stops automatically. However, though highly advantageous, the success of this strategy still depends upon the individual using it. An investor can decide to stop his forex trading which however, may eventually go higher unexpectedly, resulting to losing what could have been an instant profit.Another commonly used forex trading strategy is the one known as automatic entry order. This strategy gives an investor the option to actually set a price and then wait patiently for that price to be reached. When that price is reached, his trading then starts automatically. Automatic entry orders actually serve as protection to online forex investors. This strategy is designed to protect the investor from the constant fluctuation of the market.Taking Advantage of Managed Forex TradingSupposing you are not really that confident with your trading skills yet but are very much aware of the possible profits you could be making in forex trading, then you don't really have to be discouraged all at once. What you need to do is to take advantage of an available option that gives you the privilege of having your forex trading account be managed by an expert broker. As you give your broker the responsibility over your managing your account, you can now sit back and just keep a constant watch on things. Continue keeping this arrangement with your account until such time you are confident enough to fully handle things on your own.
For you to become successful in online forex trading, you need to be well familiar with some strategies that can be considered highly dependable and at the same time, can be implemented outright if needed. Your familiarity with these strategies will actually be the determining factors whether you make a profit or you just turn out to be another loser in this supremely analytical game of profit making. It is therefore of extreme importance that you be fully knowledgeable first with these strategies before plunging your way into the world of online forex trading or online currency trading.Familiarizing with The most Common Forex Trading Strategies AvailableBeing familiar with the best forex trading strategies will be very advantageous on your part, this will keep you on the positive side of things and can actually help you achieve greater profits in the shortest possible time. As an investor, there are various kinds of strategies available for you that can easily be taken advantage of. One well known strategy being used by the already veteran forex traders is the strategy called "leverage".This is how this strategy works. Basically, it lets an online currency trader to avail of more funds than his actual deposit amount. Through this strategy, you can take full advantage of forex trading benefits. The leverage forex trading strategy will allow you to utilize your funds as much as one hundred times that of your deposit amount. This will now give you bigger chances of achieving a much favorable outcome in your forex trading. Professional forex investors make use of the leverage forex trading strategy on a regular basis. It allows them to actually take advantage of the sudden occurrence of changes or short term fluctuations in the forex market.The next forex trading strategy that is also used quite often by investors is the strategy known as stop-loss order. This strategy is really helpful for investors as it actually helps them prevent possible losses due to wrongful decisions. It actually lets the investor set a predetermined loss margin. If the currencies you are trading go beyond your set limit, then your order stops automatically. However, though highly advantageous, the success of this strategy still depends upon the individual using it. An investor can decide to stop his forex trading which however, may eventually go higher unexpectedly, resulting to losing what could have been an instant profit.Another commonly used forex trading strategy is the one known as automatic entry order. This strategy gives an investor the option to actually set a price and then wait patiently for that price to be reached. When that price is reached, his trading then starts automatically. Automatic entry orders actually serve as protection to online forex investors. This strategy is designed to protect the investor from the constant fluctuation of the market.Taking Advantage of Managed Forex TradingSupposing you are not really that confident with your trading skills yet but are very much aware of the possible profits you could be making in forex trading, then you don't really have to be discouraged all at once. What you need to do is to take advantage of an available option that gives you the privilege of having your forex trading account be managed by an expert broker. As you give your broker the responsibility over your managing your account, you can now sit back and just keep a constant watch on things. Continue keeping this arrangement with your account until such time you are confident enough to fully handle things on your own.
Article Source: http://www.articlewarehouse.com
For you to become successful in online forex trading, you need to be well familiar with some strategies that can be considered highly dependable and at the same time, can be implemented outright if needed. Your familiarity with these strategies will actually be the determining factors whether you make a profit or you just turn out to be another loser in this supremely analytical game of profit making. It is therefore of extreme importance that you be fully knowledgeable first with these strategies before plunging your way into the world of online forex trading or online currency trading.Familiarizing with The most Common Forex Trading Strategies AvailableBeing familiar with the best forex trading strategies will be very advantageous on your part, this will keep you on the positive side of things and can actually help you achieve greater profits in the shortest possible time. As an investor, there are various kinds of strategies available for you that can easily be taken advantage of. One well known strategy being used by the already veteran forex traders is the strategy called "leverage".This is how this strategy works. Basically, it lets an online currency trader to avail of more funds than his actual deposit amount. Through this strategy, you can take full advantage of forex trading benefits. The leverage forex trading strategy will allow you to utilize your funds as much as one hundred times that of your deposit amount. This will now give you bigger chances of achieving a much favorable outcome in your forex trading. Professional forex investors make use of the leverage forex trading strategy on a regular basis. It allows them to actually take advantage of the sudden occurrence of changes or short term fluctuations in the forex market.The next forex trading strategy that is also used quite often by investors is the strategy known as stop-loss order. This strategy is really helpful for investors as it actually helps them prevent possible losses due to wrongful decisions. It actually lets the investor set a predetermined loss margin. If the currencies you are trading go beyond your set limit, then your order stops automatically. However, though highly advantageous, the success of this strategy still depends upon the individual using it. An investor can decide to stop his forex trading which however, may eventually go higher unexpectedly, resulting to losing what could have been an instant profit.Another commonly used forex trading strategy is the one known as automatic entry order. This strategy gives an investor the option to actually set a price and then wait patiently for that price to be reached. When that price is reached, his trading then starts automatically. Automatic entry orders actually serve as protection to online forex investors. This strategy is designed to protect the investor from the constant fluctuation of the market.Taking Advantage of Managed Forex TradingSupposing you are not really that confident with your trading skills yet but are very much aware of the possible profits you could be making in forex trading, then you don't really have to be discouraged all at once. What you need to do is to take advantage of an available option that gives you the privilege of having your forex trading account be managed by an expert broker. As you give your broker the responsibility over your managing your account, you can now sit back and just keep a constant watch on things. Continue keeping this arrangement with your account until such time you are confident enough to fully handle things on your own.
Article Source: http://www.articlewarehouse.com
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