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THE PRIVATE BANKERS CLUB, FOREX TRADES EASILY
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In the past, currency trading was exclusively accessible for individual speculators through the futures industry, whereas the spot marketplace in the banking arena was for the private bankers' club, the privileged few. This has all changed now, and the competition is fierce. The industry has ex panded from what was an exclusive club of proprietary hedge fund traders, corporations, banks, and large institutions. Just to give you an idea of who the competition is that takes part in the forex arena, here is the list of the top five banks in the United States as of July 4, 2006 , according to Fortune magazine. This is in order of capitalization: Bank of America, JP Morgan, Citigroup, Wachovia, and Wells Fargo. This does not include foreign banks or pension funds who participate in trading. Forex is no longer exclusive to the major trading firms, such as Goldman Sachs, Mitsubishi, Merrill Lynch, and Morgan Stanley. Now it is available to any and all individual traders who want to participate. You have 24-hour access in this market from your home or office right off your desktop or laptop computer.

Forex trading is considered the behemoth of the investment world, with more than $3.5 trillion in currency trading taking place per day, ac cording to the Bank for International Settlements. There is more daily vol ume in the forex market than in all of the U.S. stock markets combined. There is no doubt that that is one reason why foreign currency has become so popular. Also, the market has liquidity; has favorable trading applica tions, such as the ability to go long or short a position; and has a tendency to trend well. Chart watchers love the currency market because it trades well based off technical analysis studies.

FOREX TRADES EASILY

The forex market offers traders free commissions, no exchange fees, online access, and plenty of liquidity. Unlike the futures products, the forex market uses standardized contract values, meaning that full-size positions are valued at 100,000. The one main element that has attracted investors was and is the commission-free trading. Plus, most forex firms require less cap ital to initiate a start-up account than a futures account. In fact, investors can open accounts on their debit and/or credit cards; and the practice still exists of online payments through PayPal.

Some firms offer smaller-size flexi-accounts that allow traders to start applying their skills at technical analysis with as little as $500. And there is also the mini-account, which allows individual investors to adjust their positions by not having too big a contract value per position, as they can add or scale into more or fewer positions to adjust the level of leverage ac cording to their account size. This means that smaller-size investors are not excluded from trading because they can participate with mini-contracts. What is great about this feature is that a new trader or an experienced trader who is testing a system can trade the market with real money, rather than simply paper trading; the new traders can benefit from the actual ex perience of working with money and will be able to see how they handle the mental or emotional side of trading. People are emotionally driven. Fear, greed, and anxiety can wreak havoc on people's psyches. Therefore, practice trading with smaller leverage will not make you rich immediately; but it will help you hone your trading skills and help you develop confi dence in your methods and execution skills.

Having real money on the line certainly helps people to learn about their emotional makeup. This is one great way to overcome the fear and greed syndrome that many traders seem to battle. Another excellent quality that forex mini-accounts have is that smaller-size traders can afford to trade multiple lots for scaling out of trades in order to let a portion of their contracts ride for a longer, more-profitable trade and still capture profits on a partial exit.

Another attraction is that most forex companies offer free real-time news, charts, and quotes with state-of-the-art order-entry platforms; some even have automated order-entry features, such as “one cancels the other” and “trailing stops.” All of these tools and order entry platforms come at no additional charge to the trader. This market is a pay-as-you-go concept be cause there are no commissions—you simply pay a premium, or a higher spread, to buy and a higher spread to sell. Most forex dealers take the other side of your trade. You do not have direct access to the interbank market, as it is called. Because the forex market is decentralized, it is possible that five different companies are showing five different prices all at the same time within a few points (or PIPs, as they are called). Most forex traders are short term in nature, meaning they are quick-in-and-out players. Day trad ing in the forex market is beneficial for these traders due to the fact that there are no commissions, but the PIP spreads can and do add up.

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