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Forex versus Futures Trading

Summary: ApexForex compares and contrasts forex vs futures trading.

24-Hour Market
The Forex market is a continuous 24-hour endeavor form its open at 2pm EST Sunday afternoon with the Sydney-Auckland market until its close at 5pm EST Friday in New York. Forex trading follows the day around the world: Tokyo's open at 9pm follows Sydney, London begins at 2am and finally New York takes over at 8am. The seamless 24 hour nature of the Forex market gives the trader the unique experience of reacting to news and worldwide developments instantaneously, participating in real time in the largest trading market in the world.

Go Long (Bullish) or Short (Bearish)
Unlike the equity market, there is no restriction on short selling. Profit potential exists in the currency market regardless of whether a trader is long or short, or which way the market is moving. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means a trader has an equal potential to profit in a rising, or falling market.

No Commissions
ApexForex charges no commission or transaction fees to trade spot currencies exchange online or over the phone. In the equity market traders must pay a spread and a commission. The over-the counter structure of the Forex market eliminates exchange and clearing fees, which in turn lowers transaction costs. Costs are further reduced by the efficiencies created by a purely electronic market place that allows clients to deal directly with the market maker, eliminating both ticket costs and middlemen. Because the currency market offers round-the-clock liquidity, traders receive tight, competitive spreads both intra-day and night. Equity traders are more vulnerable to liquidity risk and typically receive wider dealing spreads, especially during after hours trading.

Flexible Leverage
ApexForex allows greater leverage than the equities, futures or options market. ApexForex's trading platform was designed to effectively monitor and control risk exposure in real time with an extreme degree of precision. Traders can utilize 100:1 leverage (or even greater) without risking a margin call situation. Leverage is a double-edged sword. Without proper risk management this high degree of leverage can lead to large losses as well as gains.

High Liquidity
The spot Forex market is a $1.4 trillion daily market, making it the largest and most liquid market in the world. This market can absorb trading volume and transaction sizes that dwarf the capacity of any other market. If you compare this to the $30 billion per day futures market it becomes clear that the futures markets provide only limited liquidity. The market is always liquid, meaning positions can be liquidated and stop orders executed without slippage.

Execution Quality and Speed
The futures market is know for inconsistent execution, both in terms of pricing and execution time. Every futures trader has experienced a half hour, or more wait, for a market order fill only to find out it had been executed at a price far away from where the market was supposed to be trading. Even with electronic trading and limited guarantees of execution speed, the price for fills on market orders is far from certain. We offer instantaneous execution and price certainty. On our trading platform, traders execute directly off of real-time streaming prices. In the futures market, execution is uncertain because all orders must be done on a centralized exchange. This creates a situation where liquidity is limited by the number of participants, which in turn limits quantities that can be traded at a given price. Real-time streaming prices ensure that market orders, stops, and limits are executes as quickly as possible.

Margin/Risk Management
Risk is minimized with our trading platform because of its capabilities to automatically generate a margin call if the required margin amount exceeds the dollar value of the account as a result of trading losses. All open positions will be closed immediately regardless of the size or nature of positions held within the account. In the futures market if the market moves against your positions may be liquidated at a loss and you will be liable for any resulting deficit in the account.

Article provided by ApexForex