What’s The Difference Of The Forex Market From Other Markets?
Unlike stocks, futures or options, currency trading does not occur on a regulated exchange. Or commonly called over the counter. It is not controlled by centralized authority bodies, there are no clearing houses to guarantee trade and no arbitration panel to adjudicate disputes.
At a glance, this arrangement seems confusing to investors who are already accustomed to trading structured like the NYSE or CME. However, this arrangement works very well in practice. Because participants in forex have to compete and cooperate with each other, the rules themselves provide very effective control over the market.
Furthermore, leading retail forex dealers in the United States belong to the National Futures Association (NFA) and thus they agree to bind arbitration in the event of a dispute. Therefore, it is important for every retail customer who intends to trade forex, do so only through companies that are members of the NFA.
The forex market is different from other markets with some other major ways. There are no uptick rules in forex like those in stock. Also there is no limit on the size of your position (as in futures). So, in theory, you can sell a $ 100 billion currency if you have the capital to do it. For example, if you have a friend from Japan, who also happens to be playing golf with the governor of the Bank of Japan telling you on the golf course that the BOJ plans to raise interest rates at the next meeting, you can simply go ahead and buy as many yen as you like. No one will prosecute you for insider trading if your trading pays off. There is no such thing as insider trading in forex.
The Forex market is like the Wild West world of the financial sector, with the criteria of the most liquid and liquid market in the world, traded 24 hours a day, from Monday 4 am to Saturday 4 am and there is rarely a price gap.