Forex Versus Futures
The origins of today's futures market lies in the agriculture markets of the 19th century. At that time, farmers began selling contracts to deliver agricultural products at a later date. This was done to anticipate market needs and stabilize supply and demand during off seasons.The current futures market includes much more than agricultural products. It is a worldwide market for all sorts of commodities including manufactured goods, agricultural products, and financial instruments such as currencies and treasury bonds. A futures contract states what price will be paid for a product at a specified delivery date.When the futures market is played by speculators, the actual goods are not important and there is no expectation of delivery.
Rather, it is the futures contract itself that is traded as the value of that contract changes daily according the market value of the commodity.In every futures contract there is a buyer and a seller. The seller takes the short position and the buyer takes the long position. The futures contract specifies a buying price, a quantity and a delivery date. For example: A farmer agrees to deliver 1000 bushels of wheat to a baker at a price of $5.00 a bushel. If the daily price of wheat futures falls to $4.00 a bushel, the farmer's account is credited with $1000 ($5.00 - $4.00 X 1000 bushels) and the baker's account is debited by the same amount.
Futures accounts are settled every day.At the end of the contract period, the contract is settled. If the price of wheat futures is still at $4.00 the farmer will have made $1000 on the futures contract and the baker will have lost the same amount. However, the baker now buys wheat on the open market at $4.00 a bushel - $1000 less than the original contract, so the amount he lost on the futures contract is made up by the cheaper cost of wheat. Similarly, the farmer must sell his wheat on the open market for $4.00 a bushel, less than what he anticipated when entering the futures contract, but the profit generated by the futures contract makes up the difference.The baker, however, is still in effect buying the wheat at $5.00 a bushel, and if he hadn't entered into a futures contract he would have been able to buy wheat at $4.00 a bushel. He protected himself against rising prices but he loses if the market price drops.Speculators hope to profit by the daily fluctuations in the futures market by buying long (from the buyer) if they expect prices to rise or by buying short (from the seller) if they expect prices to fall.FOREXThe foreign exchange market (FOREX) has several advantages over the futures market.
FOREX is a more liquid market ? as the largest financial market in the world it dwarfs the futures market in daily exchanges. This means that stop orders can be executed more easily and with less slippage in the FOREX.The FOREX is open 24 hours a day, 5 days a week. Most futures exchanges are open 7 hours a day. This makes FOREX more liquid and allows FOREX traders to take advantage of trading opportunities as they arise rather than waiting for the market to open.FOREX transactions are commission-free. Brokers earn money by setting a spread ? the difference between what a currency can be bought at and what it can be sold at.
In contrast, traders must pay a commission or brokerage fee for each futures transaction they enter into.Because of the high volume of trading FOREX transactions are almost instantly executed. This minimizes slippage and increases price certainty. Brokers in the futures market often quote prices reflecting the last trade ? not necessarily the price of your transaction.The FOREX is less risky than the futures market because of built-in safeguards in the trading system. Debits in futures are always a possiblility because of market gap and slippage..
This article provided courtesy of http://www.penny-stock-guide.comWhat is a Forex Market Maker?
The investor in the currency market takes for granted that a pair of currencies can be bought or sold at a moment's notice.
Once an order is placed with a broker, the trade is executed within seconds. It is, of course, not as easy as that.
Whenever a pair of currencies is bought or sold, there must be someone at the other end of the transaction. It is very unlikely that the investor will always find someone who is interested in buying and selling the same two currencies at the same amount, and at the same time. Hence, the question remains, "How is it possible that the forex investor can buy or sell at any time?" This is where the forex market makers come in.
The forex market maker is a bank or brokerage company that stands ready, every second of the trading day with a firm bid and ask price.
This is good for the investor because when the investor chooses to buy and sell a pair of currencies, the market maker will purchase from and sell to...
What is a Forex Market Maker?
Forex > What is a Forex Market Maker?
Learn Forex Trading
Are you interested in forex trading? If you are, you should probably start off by learning more about it and get some training.
Proper training is a must if you are going to be trading.
There is a lot of money involved in forex trading. Without properly learning the forex market and how to trade forex, you can really lose a lot of money. However, you can also really make a lot of money once you know what you are doing.
90% of traders actually lose money in the forex market leaving only 10% of traders making money.
Do you want to be part of the 90% or 10%? It is really up to you.
Get the proper training to learn the forex market and start making money by trading forex.
With the right training, you can learn how to start making money by trading forex in your very first month.
If you don't even know what forex trading is at this point, you definitely need to get some proper forex training to learn it.
To...
Learn Forex Trading
Forex > Learn Forex Trading
Forex Versus Futures
The origins of today's futures market lies in the agriculture markets of the 19th century. At that time, farmers began selling contracts to deliver agricultural products at a later date. This was done to anticipate market needs and stabilize supply and demand during off seasons.The current futures market includes much more than agricultural products. It is a worldwide market for all sorts of commodities including manufactured goods, agricultural products, and financial instruments such as currencies and treasury bonds. A futures contract states what price will be paid for a product at a specified delivery date.When the futures market is played by speculators, the actual goods are not important and there is no expectation of delivery.
Rather, it is the futures contract itself that is traded as the value of that contract changes daily according the market value of the commodity.In every futures contract there is a buyer and a seller. The seller takes the short position and the buyer...
Forex Versus Futures
Forex > Forex Versus Futures
FX Solutions Announces Second Annual Final Forex Trading Championship
Ridgewood, NJ (ContentDesk) March 8, 2006 - FX Solutions (www.fxsol.com), a leading foreign exchange brokerage that executes more than 99 percent of its customers trades with no human intervention, today announced details of the Second Annual Final Forex Trading Championship (www.finalforex.com). Requiring a small initial account balance of only $250, the one-month trading contest is meant to appeal to investors of all experience levels who wish to test their skills and strategies against thousands of other traders around the world for the chance to win up to $20,000. We are excited to be announcing the Second Annual Final Forex Trading Championship because forex traders are among the most competitive people youll ever meet, says Samuel Carnahan, chief marketing officer of FX Solutions, LLC. In fact, the forex market is growing for just that reason. Traders simply feel that...
FX Solutions Announces Second Annual Final Forex Trading Championship
Forex > FX Solutions Announces Second Annual Final Forex Trading Championship