Facts about FX Currency Traders

      FX currency traders have been engaging is the biggest financial trade in the world. However, this is a territory that is not familiar to the retail traders. Until internet usage improved a few years back, FX currency trading was a place that was left to multinational companies and secretive hedge funds. However, things are now different and individual investors have joined the fray and they are hungry for information. They are yearning to understand how the foreign exchange trade works. All that does not matter even if you are a beginner or you just need to refine your skills in the world of foreign exchange. This article will answer some questions about forex trade.

     Many people wonder how forex markets differ from other markets. Forex markets are not like other financial markets like options, futures or stocks; currency trading is not a regulated exchange. There is no body that governs or regulates the currency trading leave alone clearing houses or arbitration panels to settle disputes. Trading among members is done based on credit agreements. It is just like a metaphorical handshake.

     Another thing that people wonder about in forex trade is the commission. People who are used to trade in stocks or futures normally use a broker. The broker ensures that he or she must do the exchange according to the instructions given by the customer. In that case, the broker has to be paid some commission whenever the customer sells or buys tradable instrument. However, the foreign exchange market does not have commissions. This is a principles only market. The foreign exchange firms are not brokers but dealers. In that case, dealers have to assume market risk because they serve as counterparty to the investors’ trade. They make their money no through commissions but through bid-as spread. In foreign exchange, an investor cannot try to sell or bid at the offers like in markets that are based on exchange.