How can I trade foreign currency exchange rates?
As you can see from the London vacation example,currency exchange rates fluctuate. As the value of one currency rises or falls relative to another, traders decide to buy or sell currencies to make profits. Retail customers also participate in the forex marketgenerally as speculators who are hoping to profit from changes in currency rates.
Foreign currency exchange rates may be traded in one of three ways:
1. On an exchange that is regulated by the Commodity Futures Trading Commission (CFTC). For example, the Chicago Mercantile Exchange offers currency futures and options on futures products.Exchange-traded currency futures and options provide their users with a liquid, secondary market for contracts with a set unit size, a fixed expiration date and centralized clearing.
2. On an exchange that is regulated by the Securities and Exchange Commission (SEC).For example, the Philadelphia Stock Exchange offers options on currencies (i.e., the right but not the obligation to buy or sell a currency at a specific rate within a specified time). Exchange-traded options on currencies have characteristics similar to exchange traded futures and options (e.g.,a liquid, secondary market with a set size, a fixed expiration date and centralized clearing).
3.In the off-exchange, also called the over-the-counter (OTC) market. A retail customer trades directly with a counterparty and there is no exchange or central clearinghouse to support the transaction.
This brochure focuses on the
off-exchange foreign currency
market.
As you can see from the London vacation example,currency exchange rates fluctuate. As the value of one currency rises or falls relative to another, traders decide to buy or sell currencies to make profits. Retail customers also participate in the forex marketgenerally as speculators who are hoping to profit from changes in currency rates.
Foreign currency exchange rates may be traded in one of three ways:
1. On an exchange that is regulated by the Commodity Futures Trading Commission (CFTC). For example, the Chicago Mercantile Exchange offers currency futures and options on futures products.Exchange-traded currency futures and options provide their users with a liquid, secondary market for contracts with a set unit size, a fixed expiration date and centralized clearing.
2. On an exchange that is regulated by the Securities and Exchange Commission (SEC).For example, the Philadelphia Stock Exchange offers options on currencies (i.e., the right but not the obligation to buy or sell a currency at a specific rate within a specified time). Exchange-traded options on currencies have characteristics similar to exchange traded futures and options (e.g.,a liquid, secondary market with a set size, a fixed expiration date and centralized clearing).
3.In the off-exchange, also called the over-the-counter (OTC) market. A retail customer trades directly with a counterparty and there is no exchange or central clearinghouse to support the transaction.
This brochure focuses on the
off-exchange foreign currency
market.
Euro Exchange Rate
