The Market that Never Sleeps

First of all, time – your time! This is a 24 hour marketplace, it never sleeps. This means that you can trade when you want.

If you are an early bird, you will find setups on the major currencies at 7am. If you are a night owl, you’ll find setups in the evening.

The point is this, you will soon find the time frame and the currencies to monitor and you place the trades when you are available. On Ultimate ForexTM programme you will discover which strategies to trade and when. Most traders think that the big money is made trying to scalp Forex – nothing could be further from the truth. The big money is made in Forex by setting up end-of-day trading strategies and letting these positions just run and run and bring you hundreds and thousands of pips.

There are NO Gaps in the Forex market

Unlike the Stock market – the Forex market does not gap. A gap is a space on a chart where no trading takes place, leaving literally a physical white space on the chart.

This is dangerous.

If you have bought some shares in a company only to discover a week later that the company is having problems and releases a profit warning. The gap could be 10%, and unless you are using a guaranteed stop loss you would take a whopping 10% loss on the trade.

Now this is well known to stock traders and it is considered ‘market risk’. However, in the Forex market this risk does not exist. The Forex market is completely seamless – in other words there are no gaps (except from Friday evening to Sunday evening when there are no trades). This means you can trade the market non-stop without the fear of getting ‘gapped-out’ of your trade.

Spreads are Fixed, keeping your dealing costs in check

The price at what you buy and sell is important. If there is a big difference between what is costs you to buy something and immediately sell it back to the market – it only follows that this contributes to a high cost of dealing.

In stocks, the difference between what you can buy and sell your stocks (the spread) is controlled almost exclusively by market makers. The spread changes often, and is a reflection of the amount of stock available at any given time. If there are lots of buyers and sellers then clearly the dealing risk is lower for the broker and this results in tighter spreads to the customer.

Trading Forex 101

Unlike stocks and futures that trade through central exchanges, most Forex trading takes place through the interbank market and is facilitated by market makers that include major banks as well as small to large brokerage firms. It is difficult therefore to measure the volume traded on any currency at any time, as it is not registered through a central exchange – but most good data providers can give pretty good estimates.

Forex trading involves trading currency pairs such as the EUR/USD pair (Eurodollar/US dollar pair) where a buyer of this pair would actually be buying the Eurodollar and simultaneously selling short the US dollar.

There is always two currencies in every pair, a BASE and a TERMS. The BASE is always the first currency in the pair and is always equal to 1. The second currency in the pair is the TERMS and this tells you what the how much currency you could buy for 1 unit of the BASE currency. For example, if EURUSD is trading at 1.3710, it means 1 Euro is worth 1.3710 US Dollars.

When the exchange rate rises, the ‘terms currency’ is weakening against the base, and the base is obviously increasing against the terms. Currency trading is the simultaneous buying of one currency and selling of the other.