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Why Choose Forex? 2

 

Inter-bank Market  
 
The basis of the FOREX market depends on a global network of dealers that correspond and trade with their clients through electronic networks and telephones. There are no exchanges which are organized like in futures which are present to serve as a central location to ease transactions the way the New York Stock Exchange assists the equity markets.

In actual fact, the FOREX market functions a lot like the way the NASDAQ stock market in the United States works. And due to this it is also known as an over-the-counter or OTC market.

Nobody can corner the market. The FOREX market is also so massive and has so many participants that no single trader, or even a central bank, can get hold of the market price for an extensive period of time.
 
 
Even when interventions are carried out by huge central banks, they are beginning to be gradually more ineffectual and short-lived. This therefore shows how central banks are slowly becoming less and less inclined to interfere in order to control market prices.

Forex is not regulated
 
The FOREX market is often considered as a market which is unregulated, despite the fact that the operations of major dealers such as commercial banks in money centers are actually regulated under the banking laws.

The day to day operations of retail FOREX dealers aren’t regulated under any laws. Or if they are, only by regulations that are particularly for the FOREX market. In actual fact, many of these sort of organizations in the United States don’t even report to the Internal Revenue Service.

The currency futures and options that are really traded on exchanges like Chicago Mercantile Exchange (CME) are under the same regulation as other exchange-traded derivatives.
 

There are many various upsides to trading with FOREX instead of just futures or stocks. These advantages include:

1. Lower Margins
Just like stock speculation and futures, a FOREX trader is able to manage a big amount of the currency by just putting up a small amount of margin. Nevertheless, the margin requirements that are wanted for trading futures are usually about 5% of the entire value of the holding, or 50% of the total value of the stocks, the margin requirements for FOREX is about 1%. As an example, the margin needed to trade foreign exchange is $1000 for every $100,000.

This implies that by trading FOREX, the money of a currency trader can play with 5-times as much value of product as a futures trader's, or even 50 times more than a stock trader's.

When you are trading on margin, this can be an extremely profitable method to create a strategy for investment, but it is important that you take enough time to comprehend the risks that are implicated as well.

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