Guide for Forex Traders

Increasing Your Chances in Forex

In the United States, for the first time ever, in 1972, the investors of forex were able to perform currency trading everyday. Major countries worldwide had refrain pegging their currencies with the dollar and the business of oil is about to hit in exportation and importation. Added to this the currency trading then was known as the futures contracts. During that period, The Chicago Mercantile Exchange (CME) was fully operating on agricultural products, but decided to try with spot fore trading, when it realized the potential economic success of the currency exchange market which was then starting.

As of today, 2008, about $3 billion are being traded in the forex industry market daily. However, majority of its investors has little participation to the currency opportunities available to them. Nevertheless the forex spot trading industry is consist of many levels of spot, futures and options trading.The forex spot trading business also contains a much distinguished patterns of trends that might be more hard to explain if performed with a much shorter time of trading. However, this poses many problems with several new investors as they join the spot forex trading business. But this can be aborted with the use of the combinations of spot, futures and options currency trade.

Spot Trading Challenges Spot currency trading surge into rage with the introduction of the Commodity Futures Modernization Act of 2000. With an investment as low as $300 new traders in currency trading can join the spot trading market , having a leverage of 500:1. Small fluctuations may lead to big losses though it seems that the leverage is not expensive, but with also huge profits in a short span of time. Another problem one may encounter in spot currency trading is the expected rate charges of clinging to a spot contract covering the 24 hour required time. Add this situation with the slippage that happens which is the effect of a sporadic trading activity. These facts pose challenge for every forex trader and they may find forex market trading hard. (read Getting Started in Forex for nore informations )

When currency trading first came out in the market, better ways are being adopted. It was conceived to perform as a protection, a hedge for large multinational companies and banks which should protect them from downside risks of buying free floating currencies .Assuming the delivery of a certain currency such as the Canadian dollar and then buy a put in the options market should the currency lowers in its value. This manner of protection will enable them to keep their Canadian dollar trade for a longer time against a short term fluctuations that are just minor occurrences in its total longer term trends.