In the 21st Century, Knowledge is King
At Marquis, we wish to offer you everything we can to enrich your trading experience. We believe in providing you not only with the highest quality trading products and services, but educational tools and resources as well. For the 21st century trader, a thorough understanding of the forex market is an absolute necessity no matter your experience level. This is why we offer you a suite of articles which cover topics we believe are essential to all traders. Here, we will be learning more about trading forex and forex derivatives, beginning with the former.
Whenever you trade on foreign exchange through a broker, what you are actually doing is making a trade through the spot market. When it comes to the forex market, there are many tenets and nuances that most people are not directly exposed to, which limits their ability to make gains in the largest and most liquid of all financial markets in the world. The forex market, in a global sense, includes all spot, swap and futures trades. Every time you go to a bank or a local money changer to exchange one currency for another (for example, the US Dollar for the Japanese Yen), you are actively participating in a spot transaction. This is exactly what is meant by an “on the spot” currency trade. You can think of the interbank market as a larger, more complex place where such similar transactions happen on an often larger scale.
There are numerous advantages to spot trading over, for instance, futures trading. The most immediate of advantages is that the spot market occupies a significant proportion of available liquidity when it comes to the purchasing and selling of any type of currency. One other thing which makes spot market trading so appealing is the fact that it is not limited by the trading hours that may limit your typical futures exchange. The spot market is one which a majority of traders choose, and they will only continue doing so in larger and larger numbers as the spot market grows.