Until the late 1990's, large financial institutions dominated the Forex market. Over the last several years the market has witnessed a dramatic evolution, with independent firms offering access to the forex market via internet-enabled trading platforms. Individual investors are now tapping into the FX market, with access to the same market data and tools used by institutions, hedge funds and professional traders.
In some ways, Forex is very similar to other financial markets. For example, Forex is traded with recognizable patterns and clearly-defined technical applications, comparable to those found in stock trading.
But the real advantages of Forex trading are obvious in the market's unique features. Forex attracts so much investor interest due to the many advantages not found in other financial markets, such as:
Up to 200:1 Leverage
With more buying power, you can increase your total return on investment with less cash outlay. Of course, increasing leverage increases risk. With $1,000 cash in a margin account that allows 200:1 leverage (.5%), you can trade up to $200,000 in notional value.
Trade on Your Schedule; Respond to Changes in the Market
Forex is a true 24-hour market, open continuously from 5:00pm ET on Sunday to 5:00 pm on Friday. With three distinct trading sessions in the US, Europe and Asia, you can trade on your own schedule and respond to breaking news.
At $3.2 Trillion Per Day, Forex is the Most Traded Market in the World
The sheer volume of Forex helps to facilitate price stability in most market conditions. What's more, almost 85% of all currency transactions involve the 7 major currency pairs.
To benefit from these market advantages, beginner and experienced individual investors trade with FOREX.com. Dedicated to advancing trader education, FOREX.com offers extensive educational resources and support for novice traders.
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Futures Fundamentals
Futures Fundamentals: Introduction
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A futures contract is a type of derivative instrument, or financial contract, in which two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price. If you buy a futures contract, you are basically agreeing to buy something that a seller has not yet produced for a set price. But participating in the futures market does not necessarily mean that you will be responsible for receiving or delivering large inventories of physical commodities - remember, buyers and sellers in the futures market primarily enter into futures contracts to hedge risk or speculate rather than to exchange physical goods (which is the primary activity of the cash/spot market). That is why futures are used as financial instruments by not only producers and consumers but also speculators.
The consensus in the investment world is that the futures market is a major financial hub, providing an outlet for intense competition among buyers and sellers and, more importantly, providing a center to manage price risks. The futures market is extremely liquid, risky and complex by nature, but it can be understood if we break down how it functions.
While futures are not for the risk averse, they are useful for a wide range of people. In this tutorial, you'll learn how the futures market works, who uses futures and which strategies will make you a successful trader on the futures market.
Next: Futures Fundamentals: A Brief History
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