The alternative to currency futures is the forex spot trade market. Spot trading is an instant transaction between currency pairs priced and exchanged "on the spot."

The forex spot market begins 5pm EST on Sunday until 4pm EST Friday with 24 hour a day trading worldwide. The spot market allows an investor to exchange blocks of currency, also called "lot sizes", from 1,000 to 100,000.

The leverage ratio and margin requirement vary with the traders account. With a mini forex account, investors can trade currency lots with a small cash margin. The margin allows trading without paying the full value of the order.

Broker commissions for online forex trading get paid differently from online stock brokers. A forex broker makes their money from the pip spread between the bid and ask price.

Spot trading is perfect for the average investor. The forex spot market offers low-cost entry and easy online access to place orders. With around the clock access to the market, an order can be made at home after working hours. With all the trading advantages, the spot market is still extremely risky. A trading strategy should always include stop loss orders to reduce the risk.

blog comments powered by Disqus
Scottrade