Unlike the stock market, the Forex market is generally an
unregulated market with no central location for trading.
Traders use the services of a Forex broker to participate
in the market. In the U.S., legitimate Forex brokers are
registered with one of the various regulatory agencies. If
you are new to Forex trading systems, you must be careful
to seek a registered broker and avoid off-exchange currency
dealers and the scams that have evolved around the Forex
market. Legitimate brokers may be found online and your
chosen Forex broker should provide an online platform for
you to trade on. Online platforms provide Forex trading
systems with less costly trades and better accuracy in the
pricing of currency pairs than conventional trading systems.
Technological advances in computers and the Internet are
responsible to create a market of online Forex trading
opportunities. The Internet has provided for market
knowledge to be disseminated to the global Internet
community. This information was traditionally limited to
banks and other financial institutions. With the advances
in online, real-time and near real-time information flows,
you have access to market information in line with the
banks and financial institutions. Even during periods of
market volatility, online platforms are able to provide a
consistent flow of quotes. However, many online platforms
are disguised as Forex trading platforms when they are
really frauds.
Some of the fraudulent online platforms that you should be
careful to avoid, particularly if you are a new or
inexperienced trader are fraudulent brokers, bookmakers and
bucket shops. Fraudulent broker practices may include
offering outrageous bid/ask spreads and requiring
unreasonable commissions. They may promise profits and
never deliver them or claim to be trading your money when,
in reality, they have used the money for personal
interests. They may also provide you with phony accounting
statements that indicate profits they never made or they
may attempt to lure you with phony stories of successful
business relationships using fake customer names. The onus
is on you to invest time and resources in locating a
reputable broker.
Bookmakers are platforms established to bet on currencies.
While this type of betting is perfectly legitimate in some
states, it is not to be confused with Forex trading
systems. In many cases, bucket shops are fraudulent
platforms designed to cheat you out of money. Though they
will claim to engage Forex trading, they have no connection
to Forex. Their fraudulent schemes usually involve
convincing you to invest in currency futures and options
rather than the spot trading market that is Forex. Since
the methods of futures and options trading provide for a
broker to contractually engage in transactions over a
period time, this scheme allows the frauds to collect more
of your investment dollars for a longer period of time. The
spot Forex market, on the other hand, is designed to
provide simplicity and allow investors to enter and exit
the market at will. There is no contractual obligation or
lengthy time constraints.
Most online platforms are designed to run with Windows and
most web browsers. In general, an online platform provides
access to an order entry process and should have a method
of displaying currently held positions, charts of monitored
currency pairs and some itemized form of account data. You
should also seek a platform that offers some method of
backup and communication in the case of loss of access to
the Internet.
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Andrew Daigle is the creator and author of many successful
websites including ForexBoost at http://www.ForexBoost.com
and http://forex-trading-system.typepad.com , Free Forex
Training Resource for the Novice and Advanced Forex trader.
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