Large institutional investors and hedge funds are big
players in the forex market; and in the past three years, the Foreign Exchange
market had an estimated 50 percent increase in volume. Some had credited this
increase to the large activity created by the online currency trading for the
retail
investor. The forex market is an over-the-counter market,
which means that there is no main exchange or clearinghouse. This is contrary
to the futures markets which offer futures trading in “open outcry” and
electronic access; which is transparent pricing through a trading platform.
Trading the forex offers leverage, leverage that the
individual controls. Through the use of margin, an individual investor has the
choice to increase or decrease leverage through various means. Most currency
firms offer 100 times leverage on a regular size account; compare this leverage
to the leverage offered to the average equity investor, and you can see why
many traders are more attracted to trading the forex. As mentioned previously,
leverage in the forex market can also be customized to the individual trader,
which means that a trader can choose to lower or eliminate leverage while
trading foreign currencies.
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