Online Forex
Rafik Patel
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.
Rafik Patel C.E.O. ISX FX LIMITED.
The latest information and news on Forex:
FOREX-Euro falls on bank sector jitters, Aussie sags - Reuters
CNBC
FOREX-Euro falls on bank sector jitters, Aussie sags
Reuters
TOKYO, Sept 7 (Reuters) - The euro fell on Tuesday from a three-week peak against the dollar hit the previous day, as rekindled worries about ...
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Forex Crunch (blog)
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Reuters
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FOREX-Euro hits 3-week high, pares gains; sterling falls - Reuters
FOREX-Euro hits 3-week high, pares gains; sterling falls
Reuters
By Tamawa Desai LONDON, Sept 6 (Reuters) - The euro dipped on Monday as short-term players were squeezed out of long positions after the single currency ...
FOREX-Euro hits 3-week high, pares gains; sterling fallsFOXBusiness
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Forex: GBP/USD heads toward session lows - NASDAQ
Forex: GBP/USD heads toward session lows
NASDAQ
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Forex: Yen consolidates gains, BoJ policy meeting in focus - NASDAQ
AFP
Forex: Yen consolidates gains, BoJ policy meeting in focus
NASDAQ
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foreign exchange - Google News
Yen Rally Gets No Relief as Traders Bet on Bernanke Easing - Bloomberg
Forex Crunch (blog)
Yen Rally Gets No Relief as Traders Bet on Bernanke Easing
Bloomberg
?The yen is almost guaranteed to strengthen against the dollar with a second round of QE,? said John Normand, global head of foreign-exchange strategy in ...
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Asian Currencies Retreat, Led by Korean Won, Ringgit, on Intervention Risk - ...
Asian Currencies Retreat, Led by Korean Won, Ringgit, on Intervention Risk
Bloomberg
The won retreated from its strongest level in four weeks after policy makers were suspected of buying dollars in the foreign-exchange market yesterday, ...
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How much of the dollar/rupee trading happens offshore? - Livemint
Moneycontrol.com
How much of the dollar/rupee trading happens offshore?
Livemint
The Bank for International Settlements (BIS) released the preliminary results of its triennial central bank survey on foreign exchange and derivatives ...
Rupee ends at 4-week high against USDEconomic Times
Rupee off 4-week ...
Euro Falls on Bank Funds Concern; Asian Steelmakers Rally on Obama's Plans - ...
CNBC
Euro Falls on Bank Funds Concern; Asian Steelmakers Rally on Obama's Plans
Bloomberg
The won retreated from its strongest level in four weeks after policy makers were suspected of buying dollars in the foreign-exchange market yesterday, ...
Euro Falls on Concern About Financial Health of Europe...
Daily Foreign Exchange Market Summary - International Business Times
International Business Times
Daily Foreign Exchange Market Summary
International Business Times
The US dollar extended losses against most major currencies but pared gains on the Japanese yen after mixed economic news from the US. ...
Japan Said to View US Opposition as Yen Intervention ObstacleBloomber...