|
 Free Currency Consultation
Open a FREE Practice account
New to 4x
Why Forex?
History of Foreign Exchange
Foreign Exchange Basics
Frequently Asked Questions
4x Time Chart (Adobe pdf document)
Why Forex?
The foreign exchange or the forex (FX) market has many built-in advantages that make it an exciting and potentially profitable way to invest, however traders should be warned that Forex trading involves a substantial risk of loss. Please read the full risk disclaimer here: <disclaimer>. Besides being the largest market in the world, it is known for having - extreme liquidity, tight spreads, no commissions*, outstanding leverage**, low start-up costs, and 24 hr. trading - 5.5 days per week. In addition, you only have a few currency pairs to follow, not 15,000 stocks, like you do in the stock market. With these benefits you can see why the currency market is fast becoming the traders market of choice.
*
Traders pay a spread between the bid and ask prices.
** Leverage increases both gains and losses.
Liquidity
With a daily trading volume that is 50x larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the FX market. The liquidity of this market, especially that of the major currencies, helps ensure price stability. Traders can almost always open or close a position at a fair market price.
The liquidity of the Foreign Exchange market is between $1.5 and $2.0 trillion daily
Compare liquidity of the currency market ($1.5-@2.0 trillion daily) to these:
• Total Global Equity = $25 Billion
• NYSE all time quarterly $ volume record - 3rd Quarter 1998 $1.9 Trillion
• 1 week Forex volume is equal to all the reported volume of the NYSE in 2003
• 46 times larger than all futures markets combined
• Total Annual GDP of Canada - $960 Billion
• Bill Gates Total Wealth - $46.5 Billion
Leverage
Trading currencies can give you the ability to trade with up to 400:1 leverage, which substantially exceeds the common 2:1 margin offered by stock brokers. At 400:1, traders post $250 margin for a $100,000 position in the currency market. While certainly not for everyone, the substantial leverage available from online currency trading firms is a powerful trading tool.
Please note that
Leverage can work for or against you by increasing both potential gains and losses.
No Commissions
It is much more cost-efficient to trade currencies, in terms of commissions. Most FX dealers charge NO commissions, while still offering traders access to the key market information and trading platforms. FX dealer make their money on the spread between the buy and sell prices.
Simplicity
Seaching through the 15,000 stocks in the stock market can be a monumental task. Currency traders are dealing with about six major pairs. Calendars of economic events are available to know exactly when and what government reports are due out. These events are usually accompanied by movements in the currency market.
Risk Control
When Trading the currency market not only can you control your risk, as with most other markets, but also you have the advantage of rapid fills on your stops without slippage*. This is due, in part, to the extremely high liquidity that allows for such good fills when orders are placed.
*
Except in extraordinarily volatile market conditions
Minimal Start-up Cost
You can begin trading currencies with as little as $200 and make trades with as little as $25. In addition, you don't have expensive software or data feeds that you need to purchase. This allows you to begin trading without the high cost that may be associated with setting up stock accounts.
With the high level of leverage, this amount of money can allow you to begin building your trading account quickly. However, you should note that leverage can also work against you by increasing your losses.
Regular vs. Mini Account
CMSfx has a universal account that let's you trade in regular or mini lots by changing the lot size from 1 to 0.1. A lot size of 0.1 is considered a mini lot and the pip value and size of the lot are reduced by a factor of 10.
Account Set-up
Setting up a practice account and a real account is simple and easy to do. Just click here to go to the Trading Platform page.
|
