Forex Trading Features

The forex market is traded over the counter through an electronic network of Banks, Broker Dealers and Hedge Funds. There is no centralized physical exchange like with equities or futures. There are some key advantages to this. One key advantage is that the Forex Market is open 24 hours a day 6 days per week. The hours are from Sunday starting at 5pm going to Friday at 5pm New York Time. The market begins in Australia (Sydney) and continues around the world to the United States (New York).

Because the network of banks, brokers and dealers is so large, liquidity becomes a smaller issue than if you were dealing with some stocks or futures. During normal market conditions getting in and out of trades is a fairly smooth process, with a counterparty or a market maker usually available to facilitate your trade.

Another benefit of forex trading is that since you are not taking positions in companies there is no uptick rule. Therefore you can take a particular currency pair and speculate on it going up or down without any restrictions.

Information and market news broadcasts are broadly available to all traders in the FX Market. Therefore, particularly through the use of technology, the market is fairly transparent to the investor.

Some retail forex dealing firms do not charge commissions. However the dealing firm does have a bid/ask spread in place which the client pays in order to facilitate transactions. You can try out forex trading by using a demo forex platform.

One nice advantage about forex trading is flexible contract sizes. We will later address how forex contracts are set up and learn more about leverage but for now there is a key concept to understand. If you are completely new to forex trading you can trade a real money account with relatively small contract sizes where currency price fluctuation will translate to relatively small moves in dollar terms. You can control real money with an account as small as $200. With every lot you will control 1000 units worth of currency. This means that every tick in the price will be approximately 10 cents. Because you cannot lose more than you put in with many retail forex dealing firms that we work with you can practice with a real money micro account with an investment risk as small as $200.