The foreign exchange market (also known as FX market) is a worldwide decentralized, over-the-counter market in which currencies are bought and sold at current rates. These rates are determined by the foreign exchange market and determine the price of every currency.
Variable spreads and fixed spreads are two of the most common types of spreads encountered in the forex market. These two types of spreads differ in several ways, so determining which type is best for your trading style is essential.
Variable spreads are typically cheaper than fixed spreads, and can be used for a wider range of transactions. Some brokers also offer a choice of spreads, giving you more control over your trading.
The spread is the difference between the bid and ask price of a currency pair. While variable spreads can change from time to time, they are a good guide to the current liquidity in the market.
Fixed spreads are usually larger than variable spreads, and provide a more stable and predictable trade environment. However, some traders prefer the simplicity of a variable spread.
As a rule of thumb, the variable spread can be as small as 1.5 pips, while the fixed spread is typically a few tenths of a point. Both types of spreads are available from a wide variety of forex brokers.
Forex futures are derivative financial instruments which allow speculators and companies to hedge their forex risk. These instruments can be traded on an established exchange, such as the Chicago Mercantile Exchange (CME). The CME has standardized its products, which allows for a simplified trading experience net worth.
In the futures market, a trader uses leverage to magnify the relatively small price changes of an underlying asset. This can dramatically amplify profits and losses.
There are several different kinds of underlying assets that can be traded in the futures market. The most common are commodities and indices.
A futures contract is an agreement between two parties, where one pledges to purchase an asset and the other to sell the same asset. They can be settled by either physical delivery of the underlying asset, or by cash settlement.
Each futures contract has a termination date. When the contract expires, the holder of the futures contract is responsible for delivering the underlying asset trendingbird.