Forex is short for Foreign Exchange and is a Foreign Currency Market, where oils, precious metals, and of course currency is bought and sold. The Forex is the largest trading market, surpassing even the global stock market.
How it Works
Capital Forex offers a trading platform to financial institutions as well as individual investors who are interested in investing in the three trillion dollar a day Foreign Currency Market. Many investors, who are interested in the Foreign Currency Market will find that, there is no central marketplace for foreign currency exchange, transactions occur over-the-counter, electronically between traders from all around the world.
Contrasting with other markets, the Foreign Exchange Market is open 24 hours a day, 5.5 days a week. For example, when trading concludes in the United States, the markets may be starting overseas in say, for instance Tokyo. This is important if you are trading Japanese Yen. To that end, the market can be volatile at any time of the day. Essentially, in the Forex market you are essentially trading one currency for another. Capital Forex is a second tier prime broker that offers investors their own personal account manager that will work to ensure that your individual needs are taken care of. What makes Capital Forex a leading broker in the Forex market is that it offers novices to the Forex Market a demo account, where you can trade with faux money to get acclimated to this Foreign Currency Market and once you are more comfortable you can begin trading live; with actual currency.
Advantages of Trading Currency
Investors may be concerned about the Forex benefits or if are there any advantages to trading currency as opposed to other securities. There are certainly some unique advantages to trading within the Forex market. Of the Forex benefits as mentioned earlier, one big benefit is it's a 24 hour market. As long as there is a market open in the world, trading is continuous. Needless to say, because you are trading currency, this market is highly liquid. Piggybacking on that last statement, another of the many Forex benefits, is that Forex usually has a low transaction cost. With many brokers, Capital Forex included, the Forex costs of each transaction is already built into the price and the price is called the spread. The difference between the buying price and the selling price is what is meant by the spread. Another of the Forex benefits, is that traders can trade on the Forex market using leverage, in a securities market it is called margin trading, which is basically a type of loan; meaning that you can trade more money in the market that what you physically have in you account. So the Forex costs can be equate to big gains, if you made a solid trade. Another Forex benefit is the tax benefits.
Please note that you must pay taxes on any capital gains made in an investment in the financial markets. Investing in the stock market, a trader that holds onto a security for more than a year and sees a profit must pay a 15% tax, but if you see a profit from a security that you kept for less than 1 yr will be taxed as a short term gain and will be higher (depending on your tax bracket). Forex costs are a lot less, in terms of taxes. For example, investing in Forex markets 60% of your profit will be taxed as long term gains and only 40% will be taxed as a short term gain regardless of the length of time you held it. These Forex costs are lower to encourage investment in this market and to also account for the volatility of the markets.
