Forex Player

The players

Although currency trading is inherently governmental (central banks) and institutional (commercial and investment banks), the foreign exchange market is also the province of non-banking international corporations, hedge funds and individual private investors and speculators. However, technological innovations like the internet have made it feasible for private investors to monitor currency markets and to trade via intermediaries.

The attraction for private investors

The main attractions of currency dealing to private investors are:-

?24-hour trading, 5 days a week with continuous access to global dealers
?An enormous liquid market making it easy to exchange most currencies
?Volatile markets offering profit opportunities
?Recognised instruments for controlling risk exposure
?The ability to profit in rising or falling markets
?Leveraged trading with low margin requirements
?Zero dealing commission


Five ways to trade forex

Private investors can trade directly or indirectly in foreign exchange through: -

?the spot market
?forwards and futures
?options
?contracts for difference
?spread betting

We shall examine each of these instruments in turn, but first a risk warning.