Cash Forex versus
As a potential investor
it is important for you to understand the differences between cash Forex
and currency futures. In currency futures, the contract size is
predetermined. Futures traders exercise leverage by utilizing Margin to
control a futures contract. (Margin is money deposited by both the buyer
and the seller to assure the integrity of the contract.)
Leverage without proper risk management, this high
degree of leverage can lead to large losses as well as gains.
But with liquidity in
mind, the futures market may seem limiting because the data flow comes
to a stop at the end of the business day (just as it does with the stock
market) thus disrupting your perception of the market. For some traders
this could lead to a certain level of anxiety. For example, if important
data comes in from England or Japan while the U.S. futures markets is
closed, the next day's opening could be a wild ride.
In contrast to the
futures market, the spot forex market is a 24-hours, continuous currency
exchange that never closes. There are dealers in every major time zone,
in every major dealing center (i.e., London, New York, Tokyo, Hong Kong,
Sydney, etc.) willing to quote two-way markets. The size of this market,
over one trillion dollars per day gives you near perfect liquidity.
Because of the advantages of sheer volume and daily volatility, we feel
that the excitement of this market is unparalleled.