... for smart Investors
There are many advantages to trading in Forex
Liquidity - Because of the size of the Foreign Exchange Market, investments are extremely liquid. International banks are continuously providing bid and ask offers and the high number of transactions each day means there is always a buyer or a seller for any currency.
Accessibility – The market is open 24 hours a day, 5 days a week. The market opens Monday morning Australian time and closes Friday afternoon New York time. Trades can be done on the Internet from anywhere.
Open Market – Currency fluctuations are usually caused by changes in national economies. News about these changes is accessible to everyone at the same time – there can be no 'insider trading' in FOREX.
No One Can Corner the Market – The Forex market is so vast and has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. As the market has grown, even central bank interventions have become increasingly ineffectual and short lived as a tool for controlling the value of a particular currency.
Tradability in Rising and Falling Markets – Unlike the US Equity markets, which require that investors only short a stock if the prior trade was equal to or lower than the short sale price, Forex markets allow the short sale of currencies without any requirements. Trading opportunities exist 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.
Low trading costs – 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.
Profit/Loss Potential – The potential for profit/loss exists because there is always movement between currencies. Even small changes can result in substantial profits/losses because of the large amount of money involved in each transaction.
RISKS: Trading foreign currencies is a challenging and potentially profitable opportunity. However, before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not risk money you cannot afford to lose. There is considerable exposure to risk in any foreign exchange transaction. Any transaction involving currencies involves risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency. Moreover, the leveraged nature of Forex trading means that any market movement will have an effect on your deposited funds proportionally equal to the leverage factor. This may work against you as well as for you. There are also risks associated with utilizing an internet-based deal execution software application including, but not limited, to the failure of hardware and software and communications difficulties. Also, the fact that Forex is traded off-exchange means that there is no regulatory agency that can oversee and maintain standards of functioning designed to help prevent abuses, malfunctioning, unsound business practices, or deleterious attempts by unscrupulous entities to take money from investors. Off exchange also means less legal recourse in the event of business failures. For a complete discussion of risks, see our Login page -- which we require you to read thoroughly before investing in any of the accounts we list.
Guarding Against Fraud in Forex
Although Forex falls under the regulations of the FINRA and NFA, beware for fraudulent activity by unscrupulous persons. They attempt to con unwary investors out of their money. Avoiding fraud is therefore an aspect of investing in Forex that must be properly addressed. This is fairly straightforward, as there are numerous well established ways to do this and that we employ, that are summarized below. It is important to know that these are integral to our presentation of information and selection of managed account opportunities, and that they derive from our decades of experience with financial markets and Forex. Many of these precautions are also requirements of the U.S. regulating bodies that govern the brokers for the accounts to which we refer.
In our presentation of information:
- We are careful to make prospective clients very aware of the risks involved in Forex trading – and thus in managed Forex trading accounts, using the disclosure guidelines prepared by the NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission), the regulating bodies in the U.S. for futures trading.
- We do not use a high-pressure sales approach, and we do not misrepresent the likelihood of profit or possibility of loss. We present information in a complete manner, including disclosures about risk and possibility for loss, and encourage responsible risk considerations. There is never a guarantee of profit made by us or by any trader we accept for referral. We therefore avoid use of statements such as “you will always profit whether the market is up or down”. Never is there a claim that managed Forex accounts are without risk.
- We are careful to state in risk disclosures that past trends do not necessarily forecast future profitability of attempts to trade the same trends, and that knowing current market-related news does not mean that attempts to trade the market based upon this knowledge will be profitable. We clarify that use of stop loss orders is not always effective in limiting risk of loss, that there can be market conditions where it is not possible to liquidate a position, and we do not use statements proclaiming that an absolute loss limit can be guaranteed, as in wordings such as “the most you can lose is …”. We do not misrepresent the possibility of loss by omitting cautionary information on the risk of margin, and we clearly state that diversification does not of itself necessarily limit risk of loss.
- We do not make misleading statements about Forex such as proclaiming that it is a highly regulated market, such as those operating within a single nation’s borders on specific exchanges, like the U.S. stock market or other securities markets, and we do not make erroneous claims with regard to commission costs, such as stating that all broker spreads are the same or always very small and represent the entirety of commission costs.
- Because we refer to accounts that use NFA-registered brokers, our own website is subject to the NFA regulations for compliance with marketing. We are reviewed by the compliance officers at these brokerages to insure that we are giving information in accordance with NFA and CFTC guidelines, which are in place to protect the consumer from fraud and other harm.
In selecting managed account programs:
- We do not list accounts that use non-regulated brokers. Brokers subject to regulation give clients recourse if there is complainable action: they can take it up with the regulating agency, which can result in actions against the broker.
- None of the traders for accounts to which we refer work for or are in the employment of the brokers that are used, which could potentially be a conflict of interest.
- Many ploys depend on hiding from the customer what is going on in their account. We refer to accounts at brokerages that provide clients with access to their accounts 24 hours a day, so they can always see exactly what is going on in the account, and its current balance.
- We choose accounts managed by traders with experience, who are recommended by reliable sources such as brokerages who have done business with them and their clients.
- We choose accounts with track records that are verifiable. We provide prospective clients with continuing records of performance that they can verify for themselves — via read-only live accounts that they can login to directly from the broker (eliminating the possibility of faked account records by us or the trader), as well as updated performance figures, which are in many cases audited results.
We are happy to be of service to you on this website by providing information and links to a select group
of managed Forex investment opportunities. If you are new to Forex, opening an account to be managed
by those with knowledge and expertise is a sensible consideration if you wish to have part of your investment
funds participate in the Forex market. Please read our other sections Why Forex? and Frequently Asked
Questions (FAQ) for more information about Forex and managed accounts.