FOREX OR FUTURES: WHICH IS RIGHT FOR YOU?

FOREX OR FUTURES: WHICH IS RIGHT FOR YOU?
The Foreign Exchange (FX) is one of the fastest-growing investment arenas
today. Large institutional investors and hedge funds are big players in the
forex market; and in the past three years, the Foreign Exchange market had
an estimated 50 percent increase in volume. Some had credited this increase
to the large activity created by the online currency trading for the retail
investor. The forex market is an over-the-counter market, which means
that there is no main exchange or clearinghouse. This is contrary to the futures
markets which offer futures trading in “open outcry” and electronic
access; which is transparent pricing through a trading platform. This en-
4 FOREX CONQUERED
FIGURE 1.2 Existing Home Sales versus Mortgage Rates
Existing home sales (millions)
Mortgage rates (percent)
ables one to see the bids/asks and size, otherwise known as the “depth of
market” (dome).
In this book, we will be looking at the different aspects of trading the
currency markets, including the advantages and disadvantages of trading
the forex market. In addition, you will learn how to use other resources to
make better decisions on when to enter or exit your forex positions. Trading
the forex offers leverage, leverage that the individual controls. Through
the use of margin, an individual investor has the choice to increase or decrease
leverage through various means. Most currency firms offer 100 times
leverage on a regular size account; compare this leverage to the leverage offered
to the average equity investor, and you can see why many traders are
more attracted to trading the forex. As mentioned previously, leverage in
the forex market can also be customized to the individual trader, which
means that a trader can choose to lower or eliminate leverage while trading
foreign currencies.