Exchange money and trading – a guide to the Forex and how if differs from other markets

January 28th, 2013

Exchange money on the Forex market is like no other in the world. At Best Exchange Rates UK, we offer you a guide to Forex trading which is essentially the largest financial trading market in the world.  Forex trading is primarily undertaken by large corporations and financial institutions. But since the rise of the internet, retailers and individuals have become more and more interested.

So exactly what makes Forex so different from other markets. Stocks, futures and options exchange money are regulated and controlled by a central governing body. This is not the case on the Forex market, where there are no guarantees on trades and no overarching body or panel to judge disputes. Trading between members is managed through credit arrangements and agreements; effectively trading is undertaken on nothing much more than a handshake.

There is no structure on the Forex market like there is on exchanges that take place on say for instance the New York Stock Exchange. Remarkably this works well because traders on the FX market self regulate and co-operate. Reputable retailers that deal on the Forex in the US become members of the National Futures Association (NFA), which binds them to certain agreements and ‘laws’ of that association in the case of inevitable disputes.  It is the responsibility of the trader to ensure they therefore only trade with others who are NFA members.
So what other major differences exist between the Forex and other key worldwide markets; unlike stocks there are absolutely no limits to the size of your transaction, if you had the capital available, as some do, you could sell or buy $200 billion worth of a currency. There is no such thing as insider trading, so if you discovered through well connected sources that the dollar was suddenly going to take a sharp rise and you decided to put all of your available assets into the dollar and then quickly sell it all – you would not be prosecuted. In fact it is common place for economic data to be leaked before its official release.

The exchange money market may sound a bit corrupt and free from control on the Forex but it must be remembered that it is the worlds most fluid and liquid market, trades round the clock and rarely has gaps in price. Its scope and size across the world, makes the Forex currency market the most readily available and accessible market across the globe. Visit Best Exchange Rates UK for more information.