Forex Trading Guide                       Bookmark This Page

Forex trading Navigation



Forex Daytrading Alerts
Forex Mentor
Forex Trading Alerts
Chicago Forex Options
Online Forex School
Forex Platform
Understanding Forex Indicators
Automatic Forex Trading System
Simple Forex Trading Strategies
Advanced Forex Signal
Automatic Forex Trading
Forex Course Trading
Forex Trading School
Easy Forex
Spot Forex
Dollar Forex New Zealand
Day Trade Forex
Currency Converters Forex
Daily Forex Signals
How To Win At Forex Trading
Forex Prediction
Trading Platforms Rating And Not Forex
Free Daily Forex Signals
Forex Strategy Training Courses
Profitable Forex Trading
Forex trading Links

2005 Best Seller!

forex strategy explained
Buy it now

Best Forex trading products


Free Government Grants And Loans.
The Best Selling Government Grants and Loans Information Program On the Web.

Governmentgrants.Com - Government Grants.
The original government online government grants and loans directory.

The Day Trade Forex System.
The Ultimate, Step-By-Step Guide To Online Currency Trading.

Get Rich Trading E-Currency.
Trade E-Currency On The Internet For Huge Profits! Here are the Proven Money Making Secrets! Receive 60% Commission+Free Bonuses.

Trade The Nasdaq.
Trade the Nasdaq with Alan Rich.


Main Forex trading resources

Forex trading

 

Welcome to Forex Trading Guide

Article

Forex Versus Futures
Mark Humphrey

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.

FOREX

The 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.
About the Author

Mark is an avid futures trader who believes in educating the masses. His blog is online at http://www.forexblogonline.com.

Forex trading News

Forex trading

Traders work on the floor of the New York Stock Exchange in October. The National Bureau of Economic Research has reported that the US economy has been in a recession since December 2007. Photograph: Brendan McDermid/Reuters The US economy has been ...

Read more

US economic organisation announces nation officially in recession - Guardian Unlimited

Dec 01 - Euro Quietly Makes Higher Lows in November Nov 30 - Forex Automated Trading Signals Sell EUR/USD Using Breakout2 in Final Week of Free Trial Nov 30 - Forex Automated Trading Signals Buy GBP/JPY Using Breakout2 in Final Week of Free Trial Nov ...

Read more

Euro Quietly Makes Higher Lows in November - DailyFx

Dec 01 - Currency Trading Market Conditions Remain Challenging: Breakout Strategies Prove Profitable Nov 24 - Currency Trading Market Conditions Difficult to Forecast: Look for Good Range Trading Strategies Nov 20 - Forex Trading Signals Update ...

Read more

Currency Trading Market Conditions Remain Challenging: Breakout ... - DailyFx

Forex trading is a game of probabilities. Mathematically, the probability that the price of a currency will go up is the same as the probability of it going down. That means it is a 50:50 probability. This knowledge is what is applied in forex spot ...

Read more

Forex trading: The probability of profitability (I) - Punch

Synopsis : This book shows readers how to successfully trade the Forex market on their own. FX Bootcamp's Guide to Strategic and Tactical Forex Trading skillfully explains how to combine popular technical indicators to formulate a comprehensive ...

Read more

Forex Books - FXStreet.com

(*) This is the password you need to enter the hotComm room, not your FXstreet.com user account password. You can catch up and review "The 1st on Forex Week Ahead - Live Webinar" by reading the "1st on Forex - Week Ahead Report". For commentary and ...

Read more

Weekly Webinar: 1st on Forex - The Week Ahead - FXStreet.com

Mumbai: India's rupee fell towards a recent record low on Monday, weighed down by losses in the domestic equity market, but state-run banks capped losses by selling dollars, probably on behalf of the central bank. The partially convertible rupee ...

Read more

Indian rupee plummets - Gulf News

Welcome to Part IV of a four part series discussing the current state of the foreign exchange markets and the future problems and issues that will surround it. Part I of this series explained the general relationship between commodities, the Euro and ...

Read more

Forex Markets: A Look into the Dollar Part IV - Seekingalpha.com

TOKYO, Nov 27 (Reuters) - The dollar edged down against the euro on Thursday, reversing some of the previous day's gains on a string of weak U.S. economic reports that renewed worries about a deepening economic recession and revived safe-haven flows ...

Read more

FOREX-Dollar slips vs euro before U.S. holiday - Forbes

Forex day trading is something that appeals to a lot of forex traders and it's easy to see why. Currencies trade in quite a wide range every single trading day so there are always good profits to be made. However forex day trading is definitely not ...

Read more

 

Home | Blog | Partners | Add Url | Site Directory | Search this Site  | Bookmark This Page