Online Forex

Q1: When you consider that the foreign exchange market has become the world's largest financial market, with over $1.5 trillion USD traded daily, where does it go from here?

A1:The FX market is unique, in the UK there is no central exchange, we trade via the inter bank market. With more and more private individuals taking up margin trading and new forex brokers setting up, I can only see the market grow in the near future.

Q2: Other than great liquidity, what are the principal benefits attached to the forex market?

A2: There is less to consider when trading the forex markets, there are only a number of variables that affect the pricing.

Main advantages include

Forex Market allows 24 hour trading

Greater leverage - with most brokers offering 100 - 1,

Less starting capital required,

More Liquidity - day trading has to have enough volume to make it worth our while. The currency market is more liquid than all the world stock markets put together. Currencies are always in action,

Free trading systems

Better for shorting - There are artificial controls built into the market to prevent it from going down too fast. The reason is that we live in a biased world that likes to see things go up instead of down. One of these artificial contraptions is the "uptick rule," which comes into play when shorting stocks, making it more difficult to sell a stock short than to buy it. This is unheard of in the currency market. Selling currencies short while day trading is just as easy as buying them.

Ideal for Short Term Traders -

Q3: Limited market access, liquidity issues-after market hours, commission fees, capital requirements and short selling/stop restrictions are just some of the issues investors face when considering other markets. Given that the forex market removes many of these traditional barriers and therefore does not restrict the forex traders' ability to make a trade at the right time, are we likely to see an increase in trading volumes this year?

A3: With all these advantages, traders are finding it hard not to trade currencies, online trading volumes across all products is increasing at a substantial rate, however FX trading, predominantly amongst retail investors is becoming very popular.

Q4: There is stiff competition amongst online forex service providers for retail forex traders with some claiming to offer the same degree of technical analysis enjoyed by the world's largest banks and institutional traders. Is this possible?

A4: Technical Analysis has come a long way, more and more forex provides now have partnerships with firms who provide analysis. However the banks still have an advantage, the markets are still not under perfectly competitive economic model. The banks will always have access to information that is not readily available, ISX FX currently sources its information from a number of banks to fill this gap.

Q5: Do you subscribe to the theory that forex is less volatile than stocks because the market is much deeper?

A5: As a bet on the direction of a national economy, no currency has ever dropped 25 percent in a day, or imploded as rapidly and completely as an Enron or a Parmalat. In the wake of those scandals, many companies are meting out information more cautiously, making it harder to get the real "scoop" on stocks one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. If you treat forex trading like a business, including proper money management, you have a better chance of success."

Q6: U.S. interest rates-decade lows; global trade wars and terrorism fears have dominated the headlines recently. What impact has this had on retail volumes?

A6: The above factors have all led to a decline in the dollar. This coupled with tighter regulation of brokers has given investors more confidence in brokers. Also the stock market crash has driven individuals to look at the profit opportunities offered by forex.

Q7: Stateside the Commodity Futures Trading Commission (CFTC) has brought 58 actions against firms, since its new powers were awarded in 2000. Given that certain brokers continue to abuse the system, with investor money sometimes not being traded in the markets promised. What can investors do protect themselves?

A7: The retail forex market is in essence betting, as with any bookmaker there is always a risk that you will not get your winnings, or the odds will be highly stacked against you. With tighter regulation and increased competition, this risk of default has largely disappeared. The risk of price manipulation still exists and this will never really go away. Investors need to ensure that they have an independent price source and trade with a broker who offers true one click dealing.

Most brokers work on the basis of the law of large numbers, acting like the bucket shops of 50 years ago, they do not hedge any positions and are directly competing against there clients. This will always lead to price manipulation and further actions by authorities will inevitably be taken.

Q8: What is this best way for "currency rookies" to get involved in the market?

A8: Like with any new form of trading you need to know what you are doing, especially as there is margin involved. Take all the time you need to learn this new trading skill well -- practice everything you learn with a demo account before you consider going 'live' with your own money. Investors should read books, attend seminars and paper trade until they are comfortable with there strategy.

About The Author

Rafik Patel C.E.O. ISX FX LIMITED.

www.isxfx.com

rafik@isxfx.com

Latest News

Currency Trading Market Conditions Remain Challenging: Breakout ... Daily FX, NY - 15 hours ago Sharp US Dollar gains have produced profits in several of our currency trading strategies on the week, and a continuation of US Dollar strength would make ... US Dollar Forecast to Rally Against Euro, British Pound, Fall ... Daily FX all 4 news articles

Voice of America

Treasury’s Lead Role in China in Flux New York Times, United States - 2 hours ago Besides, some noted, China’s currency, by maintaining its peg to the dollar, has risen in relation to the currencies of other trading partners because the ... Yuan's Fall Watched Ahead of US-China Summit Wall Street Journal China hopes talks with US boost coordination The Associated Press Paulson Seeks to Broaden Access to China Wall Street Journal all 238 news articles

Stocks drubbed at open CNNMoney.com - 16 hours ago US crude for January delivery tumbled $3.46 to $50.99 a barrel on the New York Mercantile Exchange. In currency trading, the dollar fell against the yen and ...

Maktoob

Yen Strengthens as Manufacturing Slump Weakens Yuan, Ruble Bloomberg - 17 hours ago Bank Rossii, which manages the currency against a basket of dollars and euros to mitigate the effect of currency swings, widened the ruble’s trading band to ... Dollar Rises as Global Manufacturing and Stock Markets Plunge International Business Times Down Is Dollar's December Direction Wall Street Journal Yen Extends Gains as Signs of Global Recession Sap Carry Trade Bloomberg Bloomberg - Bloomberg all 208 news articles

UK Pound Plunges, Gilts Rise as Data Add to Signs of Slump Bloomberg - 13 hours ago The British currency declined against all of its 16 major counterparts tracked by Bloomberg after property Web site Hometrack Ltd. said house values in ...

Yuan Falls to One-Month Low as China Seeks to Shore Up Economy Bloomberg - Nov 30, 2008 “The central bank may want to test the market’s response to the possibility of a weaker yuan, but most likely it will keep the currency stable till the end ... Yuan tumbles to end at bottom of band vs dollar Forex Pros Yuan posts record low against dollar Commodity Online Rate cut sees yuan decline Shanghai Daily Bloomberg all 13 news articles

New York Times

Some Nations That Spurned the Euro Reconsider New York Times, United States - 1 hour ago After turmoil in the currency markets nearly destroyed the currencies of Iceland and Poland, the two countries are rethinking their opposition to the euro. ...

AU Preview: Q3 GDP Should be Bo... ForexTV.com, NY - 1 hour ago Forex (or FX or off-exchange foreign currency futures and options) trading involves substantial risk of loss and is not suitable for every investor. ...

GLOBAL MARKETS-Grim economic outlook pummels stocks, oil slides guardian.co.uk, UK - 9 hours ago ... also lifting the dollar, so it's possible the dollar will get a bit of a bid out of this, but currency trading is going to be choppy," Reid added. ...

Ruble Plunge Prompts Doubling of Reserve Spending, Survey Shows Bloomberg - 6 hours ago Bank Rossii buys and sells foreign currency to keep the ruble within a trading band against a basket comprised 55 percent of dollars and rest in euros. ... Russian Stocks, Ruble Drop as Production Falls More Than in ’98 Bloomberg all 8 news articles