Free Forex Guide Part 3

Because of this, you should monitor your margin balance on a regular basis and utilize
stop-loss orders on every open position to limit downside risk.

2. No Commission and No Exchange Fees

When you trade in futures, you have to pay exchange and brokerage fees. Trading forex has the advantage of being commission free. This is far
better for you. Currency trading is a worldwide inter-bank market that lets buyers to be matched with sellers in an instant.
Even though you do not have to pay a commission charge to a broker to match the buyer up with the seller, the spread is usually larger than it
is when you are trading futures.
For example, if you are trading a Japanese Yen/US Dollar pair, forex trade would have about a 3 point spread (worth $30). Trading a JY futures
trade would most likely have a spread of 1 point (worth $10) but you would also be charged the broker's commission on top of that. This price
could be as low as $10 in-and-out for self-directed online trading, or as high as $50 for full-service trading. It is however, all inclusive
pricing though.
You are going to have to compare both online forex and your specific futures commission charge to see which commission is the greater one.

3. Limited Risk and Guaranteed Stops

When you are trading futures, your risk can be unlimited. For example, if you thought that the prices for Live Cattle were going to continue
their upward trend in December 2003, just before the discovery of Mad Cow Disease found in US cattle.
The price for it after that fell dramatically, which moved the limit down several days in a row. You would not have been able to leave your
position and this could have wiped out the entire equity in your account as a result. As the price just kept on falling, you would have been
obligated to find even more money to make up the deficit in your account.

4. Rollover of Positions

When futures contracts expire, you have to plan ahead if you are going to rollover your trades. Forex positions expire every two days and you
need to rollover each trade just so that you can stay in your position.

5. 24-Hour Marketplace

With futures, you are generally limited to trading only during the few hours that each market is open in any one day. If a major news story
breaks out when the markets are closed, you will not have a way of getting out of it until the market reopens, which could be many hours
away.
Forex, on the other hand, is a 24/5 market. The day begins in New York, and follows the sun around the globe through Europe, Asia, Australia
and back to the US again. You can trade any time you like Monday-Friday.

6. Free market place

Foreign exchange is perhaps the largest market in the world with an average daily volume of US$1.4 trillion. That is 46 times as large as all
the futures markets put together! With the huge number of people trading forex around the globe, it is very hard for even governments to control
the price of their own currency.
Forex trading is simply a great alternative to futures and commodities trading. Unless you are a broker, you will likely want to get some help
in forex trading to help ensure that your venture is successful. As with all trading, there are always some risks involved, but if you follow
this comprehensive to successful forex trading, the whole process should be much easier. Let’s get started!

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