|Trading systems||Foreign exchange markets|
The foreign exchange market, or forex, is the largest and most liquid market in the world. The world's governments, banks and other large institutions trade trillions of dollars on the forex market every day. The majority of institutional traders on the forex rely on trading systems. The same goes for individuals on the forex, but some trade based on economic reports or interest payouts.
Here are some key factors to keep in mind when using trading systems in the forex market:
• The liquidity in this market - due to the huge volume - makes trading systems more accurate and effective.
• There are no commissions in this market, only spreads. Therefore, it's much easier to make many transactions without increasing costs.
• Compared to the amount of equities or commodities available, the number
of currencies to trade is limited. But because of the availability of 'exotic currency pairs' - that is, currencies from smaller countries - the range in terms of volatility is not necessarily limited.
• The main trading systems used in forex are those that follow trends (a popular saying in the market is "the trend is your friend"), or systems that buy or sell on breakouts. This is because economic indicators often cause large price movements at one time.
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