what could help more?

[pippy123]

Originally Posted by rhodytrader

You really need to take a look at the plus and minuses of all the markets you are considering. Forex is a great market for part-timers because they can trade at any time. It can be a hard market for someone who favors a more fundamental approach - or at least who wants to understand the fundamentals, as they can get rather confusing at times.

rhodytrader,

yes I definitely like the 24 hour aspect of this market. I also prefer to chart trade at least in this early stage of my trading career. Maybe since I am still struggling to understand the fundamentals and its impact...

Hopefully one day my trading preference will actually be not based on ignorance but on an informed choice

I also believe that forex trading may not be the best introduction to trading in general. Finally, if you do choose to trade, it is worth your time and effort to study the mechanics of how forex trades are executed. This market is different than other OTC markets.

ok, thx for your honest opinion toptick7. but may i ask why it is that forex, in your opinion, might not be the best intro to trading? just curious...

Also, what makes it so different that other OTC markets?

maybe having this insight will help me out


as always, thx everyone for the opinion and feed back. it's very appreciated.

P

[toptick07]

p, I made a general statement that OTC forex is different than other OTC markets. The following are my observations on the matter. I am not an attorney or securities industry regulation expert. These are only my opinions.

Currently, the handling of customer orders and funds is very loosely regulated in my opinion. You are trading “spot currency pairs”, not futures contracts. None of the rules regarding futures contracts apply to spot markets or spot transactions.

You have none of the investor protections provided by a regulated exchange. Since there is no centralized “exchange” for forex pairs, we may consider forex brokers to be OTC dealers. OTC dealers handle trades two ways. They either act as principal or agent. They may or may not “make a market” in the subject security, which in this case is any given currency pair. If they act as principal, they are taking the other side of your trade for their own account hoping to benefit from market movement or to offset their own position. If they act as agent, they are matching your order against another order (perhaps another customer, perhaps an outside market participant) and keeping the spread. There is no governing body setting forth specific guidelines on the size of spreads or how a dealer may adjust his spreads relative to that dealer’s book or other customers’ orders. There is also no disclosure as to the capacity in which your dealer acted when executing your trade. There is considerable room for "conflict of interest" in either case.

If you deposit funds with an NASD securities broker to trade stocks, your account is insured through SIPC against broker fraud or bankruptcy. (You can still trade terribly and lose your money. That’s never insured.) There is no insurance for your forex account. If your forex dealer goes bankrupt, you have no priority in those bankruptcy proceedings. Your money is gone.

CFTC and NFA have some regulatory authority over dealers in regard to anti-fraud and anti-manipulation provisions current law. This assumes that your broker is registered in the U.S. Other countries have their own rules and regs. (Most US dealers are registered and most comply with the above referenced provisions. Supervision of introducing brokers is another matter entirely – that’s just my opinion.)

Bottom line: There is very limited price transparency. You can not know if you are getting the best price. There is very little “industry regulation” except for anti-fraud and anti-manipulation rules. There are no CFTC rules regulating the forex transactions themselves.

None of this is meant to discourage you from the process of exploring the markets or from pursuing trading. Money can be made trading forex. Be conservative in your approach and start slowly. As always, be aware of current trading conditions and conduct your business accordingly. Best of luck in your trading…

[pippy123]

thx Toptick for clarifying. I understand these are your opinions. I appreciate you taking the time to share them with me.

I will definitely approach slowly and carefully.

happy trading to you as well : )