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War in Iraq
Inflation
Trade imbalances
Worker productivity
Budget deficits or surpluses
Consumer demand
Interest rates
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Terrorist scares
Severe weather conditions
Manufacturing efficiencies
Free trade agreements
Taxes and tariffs
Spread of human or animal diseases
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These and countless other events can send the price of the U.S. dollar, euro, Japanese yen, British pound and other world currencies soaring up or plummeting down at any given moment - day or night.
Conversely, currency prices have a direct correlation to the prices you pay for goods and services, imports and exports, commodities such as natural gas, coal, home heating fuel and stock prices, too.
That's why, whether you're a stock or commodity trader or an active investor it's so crucial to follow and use the forex markets as a directional source for trading opportunities and to hedge against losses.
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Stocks
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Futures
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24-Hour Market Liquidity
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Yes
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Limited Products
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Limited Products
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Price Certainty on Market Order
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Yes
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No
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No
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Up to 100:1 Leverage
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Yes
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No
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No
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Commission-Free Trading
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Yes
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No
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No
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In the currency market, you pay NO commissions and NO exchange fees. Because you deal directly with the market maker via a purely electronic online exchange, you eliminate both ticket costs and middleman brokerage fees. There is still a cost to initiate any trade, but that cost is reflected in the bid/ask spread that is also present in futures or equities trading. Currency dealers are compensated for their services through the bid-ask spread.
Unlike most futures exchanges, the currency market is a seamless 24-hour market. At 2:15 p.m. Sunday, New York time, trading begins as markets open in Sydney and Singapore. At 7 p.m. the Tokyo market opens, followed by London at 2 a.m., and finally New York at 8 a.m. As a trader, this allows you to react to favorable or unfavorable news immediately. If important data come in from England or Japan while the U.S. futures market is closed, the next day's opening could be a wild ride. (Overnight markets in futures currency contracts exist, but they are only thinly traded, not very liquid and difficult for the average investor to access.)
The futures and equities markets do not offer instant execution or price certainty. Even with electronic trading and limited guarantees of execution speed, the price for fills on market orders is far from certain. In the futures and equities markets, the prices quoted by brokers often represent the last trade, not necessarily the price for which the contract will be filled. In contrast, currency traders enjoy rapid execution and price certainty.
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