How is Forex Different?
Forex (Foreign Exchange Market) is not controlled by a governing body, instead, it relies on the person to person trading based on credit agreements. The forex market is self-regulated and relies on the checks and balances of those that use the trading currency. Unlike most currency trades, forex is a 24 hours a day opportunity and requires no currency exchange even as it used to trade worldwide. This is where pips are the currency rather than USD, yen, etc.
What is being sold and bought with Forex?
Forex is a speculative currency. This does not make the exchange imaginary, it simply means that it is held in computer entries. Forex is liquid making trade quick and efficiently priced because of multiple buyers and sellers. This allows for the following currencies to be traded on the forex market:
- EUR/USD (euro/dollar)
- USD/JPY (dollar/Japanese yen)
- GBP/USD (British pound/dollar)
- USD/CHF (dollar/Swiss franc)
Who Uses Forex?
With forex being an international trading system, the idea may be daunting. Large corporations and high dollar traders use this market to do business over every sea. But there is room for the day hunter in the forex market. These day traders, or night, since forex offers 24/7 trading, are driven by the fast-paced variety of trades available.
Forex traders analyse and study currencies, sometimes the day hunter has a better view than the large corporations because of the time and effort put forth to know what to trade, when to trade it, and what happened while they were asleep. In forex trading, there is not the massive commissions and fees that are attached to stock trading. However, those new to the forex trade should be on the conservative side and start with a serious company. AlfaTrade provides these traders with constant updates on markets, tips, and feedback. In a highly volatile market, a solid start is recommended.
Forex versus Stock Market
The foreign exchange is the largest financial market. Traders are drawn to the forex market for the 24-hour trading, the liquidity, and the affordability to trade on different levels.
The stock market is historically a secure trading method. And while trading on the blue chip market looks good on a portfolio, the less volatile nature of the trading system also may display a low rate of risk.
Most day traders are looking for a fast paced pay-off at the end of the day. Forex is prime for this as it is highly volatile giving the market massive upswings. Stock market trading is more static, a long-term investment that does not appeal to day traders. In the same regard, the leverage of both is signifigantly smaller. 2:1 for stocks, while forex has leverage up to 50:1.
Then there are the trading hours. Forex traders are able to trade 24/7 while the foreign exchange varies in hours dependent on the country entering the market.
Why Forex Works
With the internet comes a faster-paced life, that applies to trading as much as any commerce conducted over electronic trading. You are able to participate and trade with millions of people worldwide in real time with real time updates. When deciding to trade forex, take into account the risk management and accessibility. It was tailor made for excited traders who want to trade without limits such as time, capital, and at their own risk and reward. Check this article on AlfaTrade to see that it represents a good place to start if forex sounds like your type of trading.