Forex Accomplishment

This is the first of 2 articles looking at foreign exchange vs stocks from the standpoint of the retail stock trader. Foreign exchange has been getting a large amount of publicity recently and has attracted many new traders working from home, as well as many traders looking to widen into FOREX trading. But what precisely is the foreign exchange market? How does it work?

Global Market

FOREX trading is a world affair. You are not limited to dealing in the currency of your own country. Currency exchange is an over-the-counter market and there is no central exchange or clearing house. This gives the forex market a couple of edges over the stock market for a retail trader. Currency prices, on the other hand, are driven by the business performance of an entire country. This is more than the total of all of the world’s stock exchanges added together. As you can imagine, such high liquidity also implies that it is intensely unlikely a trade in any of the major currency pairs would have problems getting matched, even in bad times. This is a massive advantage, especially if you are trading big positions.

Development

So if foreign exchange trading has so many benefits, why is it that it isn’t been favored until recently? The answer’s the market itself only began for real in the 1970s when exchange rates stopped being permanently pegged by the ‘gold standard’ and were permitted to vary.

Even then, it was only the banks, hedge funds etc who were involved in trading on the currency market initially. There had been no history of personal backers getting on the telephone to a broker to trade in currency seeing as there had been in stocks. This suggests that it was not until the development of the Net the forex market opened up and foreign exchange vs stocks changed into a real choice for retail traders.

Tags: auto tradng, currency trading, ea, expert advisor, forex software, Forex Trading

Fey  Jan 20 Forex Trading