Being a Forex trader can be a great source of extra income. The market is open twenty-four hours a day, six days a week, so your trading activity will not be limited by the opening or closing bell typical to stock markets. This lets you trade currencies while still keeping your regular job.
As opposed to stocks, the forex doesn't have a central clearing house. Currency trading transactions take place over-the-counter between agreeable traders from different parts of the globe. In the past, the exchange was only among large banks, organizations and brokers. These entities had transactions that were in yards, which is US $1 billion worth of currency. The exchanges among the said entities produce so much volume that Forex is considered the world’s biggest financial market.
However, towards the end of the 20th century, the market opened up to retail traders. These days, individuals of average salaries can be foreign exchange traders because the trading size decreased to a manageable amount. Retail traders now are provided an opportunity to trade micro lots, which enable you to control one thousand US dollars worth of currency.
Introducing micro-lots is a huge step down from the billion dollar yards traded in the past. The IC Markets is also an extremely leveraged one, and this means you have the ability to control a US $10,000 worth of currency for as small as 50 USD. In this manner, you can ease into the Forex market little by little, and acquire experience and confidence without risking a considerable amount of money.
Retail traders cannot trade in the interbank market because they do not have credit connections with these companies. Retail traders generally trade by way of market makers or electronic communications networks, also called ECNs.
Many state that ECNs are better because unlike market makers there is no third party in carrying out the orders you entered. ECNs do the job by obtaining prices from numerous market participants, such as banks and market makers, and also other traders to present the best bid/ask quotes on their trading applications.
Because an ECN broker consolidates price quotations from a number of sources, expect to see tighter bid/ask spreads than what you can find from market makers. Furthermore, because an ECN broker only matches trades among market participants, there isn't any likelihood of them trading against you. Market makers on the contrary are capable of doing that, and thus present a distinct conflict of interest. Considering that ECNs don't have any role in setting prices, there is less risk of price manipulation.Find true ECN brokers here.