Investors and speculators using the Internet as an investment tool will find that the Forex market offers several advantages over trading on other markets.
The Forex market is open 5.5 days a week, 24 hours a day. The forex market, in conjunction with the interbank market, is one of the largest financial markets in the world. However, the retail sector is only a small portion of the overall forex market. Conversely, after hours trading in the other markets has several limitations. In the US, for example, equities and futures traders have access to ECNs (Electronic Communications Networks), also known as "matching systems". These networks are established to provide a method for traders to buy and sell amongst each other. Because after hours trading typically has lower liquidity, such networks are usually not able to offer as tight of spreads as would be offered during normal market hours.
Currency futures quotes are inversions of the spot Forex, or cash, price. For example, if the spot price for USD/CHF is 1.7100/1.7105, the futures equivalent is .5894/ .5897. In the spot price, the bid price is always shown on the left and the ask price on the right. The value of the base currency is always 1 (one). In the example above 1 US Dollar (USD) = 1.7100 CHF.
Currency futures' prices also have the added complication a forward Forex component that takes into account a time factor that is not necessary in the spot Forex Market.
The off-exchange retail foreign currency market (or Forex market) has many differences, as outlined above. However, one of the most significant factors is the element of risk. The Forex market is the riskiest of all investment vehicles and is suitable only for experienced traders. The higher leverage and volatility found in this market increase the trader's risk of loss. There is the potential to lose, all or more, of your original investment.