In spite of the fact that the currency market is the largest and the most liquid in the world for today, brokers aspired to get profit till now basically in the share markets and futures. It speaks, first of all, restrictive properties of services offered by banks on operations with currency.
Perhaps, the most important property of the currency market is its stability. Unlike share market Forex does not sin with sudden falling. If actions depreciate, it means crash at a stock exchange. If the dollar goes down in price it means that other currency becomes more expensive. So, for example, happens with yen, which for some months in the end of 1998 became more expensive on a quarter in relation to dollar. There were separate days when dollar falling was measured by tens percent. But the market has not disappeared also trade proceeded as usually. Stability of this business that the currency is absolutely liquid goods, demand on which is constant.
The Forex market works 24 hours a day.
Transactions in the currency market are made round the clock, since Asia approximately at 24:00 on the Central European time on Sunday evening and coming to an end in the United States of America on Friday nearby 23:00 on the Central European time. Though in the share markets the system of electronic communication networks (ECN) is used, and in the future markets are applied systems of type Globex with which help it is possible to make transactions after end of work of these markets, quite often such transactions have low liquidity, and the offered prices can be frequent uncompetitive.
Absence of the top and bottom limits of change of prices.
In the future markets there are the certain restrictions limiting quantity and type of transactions, which the participant of the market can make in certain price situations. When the price of any concrete currency rises or falls lower in advance defined on every day level, participants of the market are not allowed to open new positions; they can, if wish, only to close already existing positions. This mechanism is intended for the control over instability of the daily prices, however, as the prices in the future currency market in any case follow the prices of the market “spot” of cash currency next day in the future market there can be “rupture” or, otherwise, the future prices will be arranged under the prices “spot” of next day. In the off-exchange market such restrictions in fulfillment of transactions does not exist that allows the participant of the market to realize the strategy of fulfillment of transactions in full. As the participant of the market can protect the position from considerable unexpected changes of the price by execution of orders to sell/buy under in advance set price (stop-loss orders), it means that it is possible to exclude completely high instability of the market “spot”.
Sell before you will start to buy.
Share brokers offer clients very limited margin at “short” sale. It means that the client has no liquidity, which would allow him to sell actions before he will buy them. From the point of margin view the participant of the market is absolutely in the same situation when opens a position for sale or currency purchase in the market “spot”. If, working in the market “spot”, you sell one currency – you will necessarily buy another.
Before you decide to make a forex investment or start forex trading yourself, better find a nice forex book and read more about the currency exchange market – this will save you from lots of troubles and traps.