Because the foreign exchange
market gaps are very limited (the market is
closed briefly on weekends), it's not
dramatically affected by buying programs that
allow it to be easily manipulated. The forex
market offers some of the smoothest trends
available in any market. No other market can
come close to the amount of monetary volume and
participation as the forex market making it a
haven for traders not having to deal with gaps
and price movements, erratic spikes and other
choppy market conditions more commonly
experienced in the lower volume markets, like
futures or options.
Though some speculators are unaware, all financial markets have a spread (the difference between the bid and ask price). In the futures market you are not only paying the spread, but you are also paying commission charges, clearing and exchange fees on top of the spread. Ticker prices in the futures market typically signify the last traded price, not the spread. Global Forex Trading offers you commission-free trading on tradable prices. GFT is compensated by revenues from its activities as a currency dealer, including proceeds from buying, selling, converting, as well as holding currencies and interest on deposited funds and rollover fees. In a sense, what you see is what you get, allowing you to make quick decisions on your forex trades without having to account for fees that may affect your profit/loss or slippage between the price you have just seen on the ticker and the price upon which the order will be filled.
Better Leverage
Trading in the spot currency
markets provides advantages over trading
currency futures contracts. One of the main
advantages for traders trading spot currencies
is the margin rate or leverage that clients are
given. In spot currency trading, customers
receive one low margin rate for trades done 24
hours a day. In currency futures trading, the
client has one margin rate for "day" trades and
one margin rate for "overnight" positions. This
can become a hassle for traders and decreases
the overall tradability of the currency futures
markets. Margin rates in spot currency trading
vary from around 1 to 5 percent depending on the
size of transactions a particular trader
initiates. Global Forex Trading's spot currency
trading gives the customer one rate all the
time, no hassles and no margin calls. One rate
so that the trader can manage their own risk
efficiently and simply.
FX
vs Stock
Historically, the majority of the general public has viewed the securities markets as an investment vehicle. In the last ten years securities have taken on a more speculative nature. This was perhaps due to the downfall of the overall stock market as many security issues experienced extreme volatility because of the irrational exuberance displayed in the marketplace. The implied return associated with an investment was no longer true. (If indeed it ever was.) Many traders engaged in the daytrader rush of the late 90's only to realize that, from a leverage standpoint, it took quite a bit of capital to day trade, and the return while potentially higher than long-term investing was not exponential. After the onset of the daytrader rush, many traders moved into the futures stock index markets where they found they could leverage their capital greater and not have their capital tied up when it could be earning interest or making money somewhere else. Like the futures markets, spot currency trading is an excellent vehicle for pattern daytraders who desire to leverage their current capital to trade. Spot currency or forex trading provides more options, greater volatility and stronger trends than currently available in stock futures indexes. Former securities daytraders have an excellent home in spot foreign exchange (forex).
No Middlemen
Centralized exchanges provide many advantages to the trader. However, one of the problems with any centralized exchange is the involvement of middlemen. Any party located in between the trader and the buyer or seller of the security or instrument traded will cost them money. The cost can be either in time or in fees. Spot currency trading does away with the middlemen and allows clients to interact directly with the market-maker responsible for the pricing on a particular currency pair. Forex traders get quicker access and cheaper costs.
Buy/Sell programs do not control the market
How many times have you heard that "fund A" was selling "X" or buying "Z"? Rumor had it that the funds were taking profits because of the end of the financial year or because today is "triple witching day", all as an explanation of why this stock is up or the market in general is down or positive on the session. No matter what your broker says the stock market is very susceptible to large fund buying and selling, and it is not uncommon for a fund to run a particular issue for a few days. In spot currency trading, the liquidity of the forex trading market makes the likelihood of any one fund or bank to control a particular currency very slim. Banks, hedge funds, FCM's, governments, retail currency conversion houses and large net-worth individuals are just some of the participants in the spot currency markets where the liquidity is unprecedented.
Analysts and brokerage firms are less likely to influence the market
Have you watched TV lately? Heard about a certain Telecomm stock and an analyst of a prestigious brokerage firm accused of keeping its recommendations, such as "buy" when the stock was rapidly declining? It is the nature of these relationships. No matter what the government does to step in and discourage this type of activity, we have not heard the last of it. IPO's are big business for both the companies going public and the brokerage houses. Relationships are mutually beneficial and analysts work for the brokerage houses that need the companies as clients. That catch-22 will never disappear. Foreign exchange, as the prime market, generates billions in revenue for the world's banks and is a necessity of the global markets. Analysts in foreign exchange don't drive the deal flow, they just analyze the forex trading market.
8000 stocks vs 4 major currency pairs
There are approximately 4,500 stocks listed on the New York Stock exchange. Another 3,500 are listed on the NASDAQ. Which one will you trade? Got the software? Got the time? In spot currency trading, you have 4 major markets, 24 hours a day 5.5 days a week. You have approximately 34 second-tier currencies to look at in your spare time (if you are so inclined). Concentrate on the majors, find your trade. Spend your afternoon on the golf course or with your kids (instead of with your eye doctor trying to diagnose why you are seeing double).
Simply put: no commissions, no clearing fees, no exchange fees, no government fees, and no brokerage fees. Sure there may be different names for different fees at different places, but in spot currencies no commissions means just that- NO COMMISSIONS.GFT is compensated by revenues from its activities as a currency dealer, including proceeds from buying, selling, converting as well as holding currencies and interest on deposited funds and rollover fees.
Commission free: GFT is compensated by revenues from its activities as a currency dealer,
including proceeds from buying, selling, converting, as well as holding
currencies and interest on deposited funds and rollover fees.
Same price for broker assisted trades
No premium for calling in orders, whether or not you trade forex via the phone, use market orders, stop orders, limit orders or even contingent orders. In spot currency trading you do not have to worry about extra charges. Ever wonder why a securities brokerage house charges you more if they have to guarantee you a price than if you give them a market order with no price qualifier? Well you don't have to worry about it if you trade the currency markets.
Trade off of your profits
Ever been up on a stock and wished you could leverage that profit and get in a little more of the issue? In spot currency trading you can. Use your open profits to add to your positions. As you gain experience, experiment with pyramid trading strategies. The options are endless because the market is cutting edge. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
What is FX?
Over the last three decades the foreign exchange market has become the world's largest financial market, with over $1.5 trillion USD traded daily. Forex is part of the bank-to-bank currency market known as the 24-hour Interbank market. Forex trading is not conducted on a regulated exchange and as a result there are additional risks associated with forex trading.The Interbank market literally follows the sun around the world, moving from major banking centers of the United States to Australia, New Zealand to the Far East, to Europe then back to the United States.
Forex Market Summary of Benefits
– Forex is open 24 hours a day.
– Forex is the most liquid market in the world.
– 100-to-1 leverage reduces the need for large
amounts of capital.
– No restrictions on shorting which allows you to enjoy trading opportunities during any market condition.
Until recently, the forex market wasn't for the average trader or individual speculator. With the large minimum transaction sizes and often-stringent financial requirements, banks, hedge funds, major currency dealers and the occasional high net-worth individual speculator were the principal participants. These large traders were able to take advantage of the many benefits offered by the forex market vs. other markets, including fantastic liquidity and the strong trending nature of the world's primary currency exchange rates.
GFT Gives You the Access and Resources to Trade Forex
As a primary market-maker in foreign currency trading, Global Forex Trading is able to offer smaller transactional sizes and allow traders of almost any size, including individual speculators or smaller companies, the opportunity to trade the same rates and price movements as the large players who once dominated the forex market.
The forex market removes the traditional barriers that exist in other markets without restricting the forex traders' ability to make a trade at the right times. Forex trading is not conducted on a regulated exchange and as a result there are additional risks associated with forex trading.
Some examples include:
Other Markets
Forex Markets
Limited floor trading hours dictated by the time zone of the trading location, significantly restricting the number of hours a market is open and when it can be accessed.
The Forex market is open 24 hours a day, 5.5 days a week. Because of the decentralized clearing of trades and overlap of major markets in Asia, London and the United States, the market remains open and liquid throughout the day and overnight.
Threat of liquidity drying up after market hours or because many market participants decide to stay on the sidelines or move to more popular markets.
Most liquid market in the world eclipsing all others in comparison. Most transactions must continue, since currency exchange is a required mechanism needed to facilitate world commerce.
Traders are gouged with fees, such as commissions, clearing fees, exchange fees and government fees.
Commission-Free.GFT is compensated by revenues from its activities as a currency dealer, including proceeds from buying, selling, converting as well as holding currencies and interest on deposited funds and rollover fees.
Large capital requirements, high margin rates, restrictions on shorting, very little autonomy.
One consistent margin rate 24 hours a day allows Forex traders to leverage their capital more efficiently with as high as 100-to-1 leverage.
Short selling and stop order restrictions.
None.
Pattern daytraders subject to restrictions requiring account balances in excess of $50,000.
No restrictions. Very low account balances.
The software, DealBook 360 and why its so good
DEALBOOK® 360
DealBook® 360 is our powerful online currency trading tool that provides you with instant access to the forex market. With a host of features found only in DealBook® 360, it sets the bar for Forex Trading platforms. Available only from Global Forex Trading, DealBook® 360 gives you the tools you need to trade more effectively in any market condition. Learn more about DealBook® 360
DEALBOOK® FX MOBILE
DealBook® FX Mobile delivers the power of DealBook® FX to currency traders who are using wireless technology. In fact, we've created software in a wireless platform that's comparable to most forex brokers' PC-based applications. Learn more about DealBook® FX Mobile
GFT | PRIME
GFT | PRIME is a trading platform that offers you access to multiple interbank sources and other institutional customers all within the same trading environment. And, with our extremely smooth and efficient credit process, you no longer have to wait for credit lines at large institutions (yet, you still can access them). Learn more about GFT | PRIME
History of FX
The modern foreign exchange market (fx or forex) began to develop in 1973. However, money has been around in one form or another since the time of Pharaohs. The Babylonians are credited with the first use of paper bills and receipts, but Middle Eastern moneychangers were the first currency traders to exchange coins from one culture to another. During the middle ages, the need for another form of currency besides coins emerged as the method of choice. These paper bills represented transferable third-party payments of funds, making foreign currency exchange trading much easier for merchants and traders and causing these regional economies to flourish.
From the infantile stages of forex during the Middle Ages to WWI, the forex markets were relatively stable and without much speculative activity. After WWI, the forex markets became very volatile and speculative activity increased tenfold. Speculation in the forex market was not looked on as favorable by most institutions and the public in general. The Great Depression and the removal of the gold standard in 1931 created a serious lull in forex market activity. From 1931 until 1973, the forex market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the forex markets during these times was little, if any.
Date
Event
1944
Bretton Woods Accord is established to help stabilize the global economy after World War II
1971
Smithsonian Agreement established to allow for greater fluctuation band for currencies
1972
European Joint Float established as the European community tried to move away from its dependency on the U.S. dollar
1973
Smithsonian Agreement and European Joint Float failed and signified the official switch to a free-floating system
1978
Free-floating system officially mandated by the IMF
1993
European Monetary System fails making way for a world-wide free-floating system
1997
Global Forex Trading begins offering services to customers as one of the first in the U.S.
2006
GFT Global Markets is established to offer forex trading, and derivatives trading, including spread bets and CFDs, to customers wordwide
The Bretton Woods Accord
The first major transformation, the Bretton Woods Accord, occurred near the end of World War II. The United States, Great Britain and France met at the United Nations Monetary and Financial Conference in Bretton Woods, N.H., to design a new global economic direction. The location was chosen because, at the time, the U.S. was the only country unscathed by war. Most of the major European countries were in shambles. Up until WWII, the British pound was the major currency by which most currencies were compared, but that changed when the Nazi campaign against Britain included a major counterfeiting effort against its currency. In fact, WWII vaulted the U.S. dollar, from a failed currency after the stock market crash of 1929 to benchmark currency, by which most other international currencies would become compared and valued. The Bretton Woods Accord was established to create a stable environment, leading to an onslaught of other global economies restoring themselves and their currencies. In fact, the Brettonn Woods Accord established the pegging of currencies and the International Monetary Fund (IMF) in hopes of stabilizing the global economic situation.
Major currencies were now pegged to the U.S. dollar, fluctuating by one percent on either side of the set standard against the dollar. When a currency's exchange rate would approach the limit on either side of this standard, the respective central bank would intervene to bring the exchange rate back into the accepted range. At the same time, the U.S. dollar was pegged to gold at a price of $35 per ounce, further bringing stability to other currencies and world forex situation.
The Bretton Woods Accord lasted until 1971. Ultimately, it failed, but it did accomplish what its charter set out to do, which was to reestablish economic stability in Europe and Japan. The major reason it failed was because it continued to use a set standard to fix a currency against a smaller market, such as gold.
The Beginning of the free-floating system
After the Bretton Woods Accord came the Smithsonian Agreement in December of 1971. This agreement was similar to the Bretton Woods Accord, but allowed for a greater fluctuation band for the currencies. In 1972, the European community tried to move away from its dependency on the dollar. The European Joint Float was established by West Germany, France, Italy, the Netherlands, Belgium and Luxemburg. The agreement was similar to the Bretton Woods Accord, but allowed a greater range of fluctuation in the currency values.
Both agreements suffered mistakes similar to the Bretton Woods Accord and, in 1973, collapsed. The collapses signified the official switch to the free-floating system. This occurred by default, as there were no new agreements to take their place. Governments were now free to peg their currencies, semi-peg or allow them to freely float. In 1978, the free-floating system was officially mandated.
In a final effort to gain independence from the dollar, Europe created the European Monetary System in July of 1978. Like the previous agreements, it failed in 1993, but what followed was an evolution from a combination of the EMS and the Bretton Woods Accord.
Today, the major currencies, such as the U.S. dollar, Euro, British pound, Swiss franc and the Japanese yen, move independently from other currencies. The currencies are traded by anyone who wishes, including an influx of speculation by banks, hedge funds, brokerage houses and individuals. Only on occasion do some of the central banks intervene to move or attempt to move currencies to their desired levels. The underlying factor that drives today's forex markets, however, is supply and demand. The free-floating system is ideal for today's forex markets. The supply and demand of currencies are driven by three factors, including interest rates and interest rate differentials, commodities and global trade. The forex market is the prime market of the world by all which all others can be considered derivatives (like futures and options).
