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FOREX INFORMATION CENTER
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MARKET COMPARISON
In order to maintain a diversified and growing portfolio, sophisticated investors can now take advantage of the foreign exchange market to balance out their equity, bond, and derivative holdings with foreign exchange positions. Being that the currency market has an incredible influence in many aspects of the world's economy, including a countries equity market and general economic health, Forex provides an exceptional opportunity to diversify and offset portfolio losses from equities and bonds. Below are some of the qualities that set the foreign exchange market apart from the equity and futures markets.
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Foreign Exchange Trading |
Equities Trading |
Futures Trading |
| Typical Leverage |
100:1 |
2:1 |
15:1 |
| Liquidity |
Daily Turnover: $1.9 Trillion |
Limited Liquidity |
Limited Liquidity |
| Commissions |
No Commissions |
Commissions and Exchange Fees |
Commissions and Exchange Fees |
| Trading Activity |
24 Hour Active Market |
7 Hours/ Limited After Hours |
7 Hours/ Limited After Hours |
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ADVANTAGES OF FOREX VS EQUITIES
Forex Brings Profit In Bear And Bull Markets
Unlike the equity market, the foreign exchange market does not got through bullish and bearish cycles. Due to the lack of restriction on short-selling, theopportunity to profit from a currency is ever present, whether its value is going up or down.
Superior Liquidity And 24-Hour Trading
The foreign exchange market is the largest and most liquid market in the world, with a daily turnover of $1.5 trillion and trades around the clock, starting on Sunday at 5:00 PM Eastern Standard Time with the opening of the markets in Australia and Singapore. Trading follows in Japan, and Europe, which open at 2:00 AM and 3:00 AM Eastern Time on Monday, respectively. The market closes on Friday 4:00PM Eastern Standard Time. Meanwhile, the equity market is only open from 9:30AM to 4:00 PM Eastern Standard Time, thus limiting your opportunity to trade and make profits.
100:1 Leverage
Leverage refers to the buying power an instrument gives its holder. A 2:1 leverage, for example (a standard value for equity accounts), will give the holder an exposure twice the size of his investment. FX International Group offers an average leverage of 100:1 and as much as 400:1, depending on the platform used. Trading with FX International Group on average will provide you with 100:1 leverage and even up to 400:1 in some circumstances, which exceeds the 2:1 margin offered in equity accounts. This means that a standard position of $1,000 provides you with the buying power of $100,000 currencies.
Although trading with highly leveraged positions is very risky and can result in the loss of the entire initial investment, substantial leverage is also a powerful moneymaking tool if managed appropriately. This high degree of leverage is essential in the Forex market because a major currency moves less than 1% per day, on average.
Commission-Free Trading
The lack of commission charges in the foreign exchange market combined with the consistently narrow spreads on major exchange rate pairs offered by FX International Group, make Forex the most inexpensive market to trade in. Forex
ADVANTAGES OF FOREX VS. FUTURES
Liquidity
The Forex market is the heavyweight of all markets with $1.5 trillion daily transactions, as opposed to the $30 billion daily volume limited liquidity available in the futures market. Stop-loss orders and limit orders are executed without slippage and requoting.
100:1 Leverage
One of the factors that sets the Forex market apart from all other markets is the substantial leverage offered. With US$1,000 per position, the trader holds US$100,000 worth of a currency (a 100:1 leverage, compared to a 15:1 leverage offered by the futures market). FX International Group stands to offer up to 400:1 leverage depending on size of funds and risk level.
Forex Trades 24-Hours A Day
Like the equities market, the futures market offers limited trading hours, whereas the Forex market trades around the globe 24 hours a day, opening Sunday at 5:00PM Eastern Time, and closing on Friday at 4:00PM.
Commission Free Trading
There are no commission charges when trading currencies. With consistently low spreads on the major pairs, trading Forex with FX International Group is less expensive than trading any other market, including the Futures market which normally carries a commission and exchange fee.
Flexibility
Unlike the futures market, where a trader is locked into a position, the spot currency market offers traders the flexibility to respond to news, events, or catastrophes in a matter of seconds in order to profit from changing market conditions or prevent greater losses.
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