The RDS Forex System: A Breakthrough Method To Profiting from Market Turning Points

CHAPTER 2

Comparing Forex to Other Markets

So what is the difference between Forex and currency futures? Since both the Chicago Mercantile Exchange (CME) Group and the banks refer to currency trading as Forex, there is plenty of room for confusion out there as both sides of the fence jockey for market share. The CME Group offers the Futures version (sometimes referred to as the Forward) and the Banks offer the cash version (sometimes referred to as the Spot). The products are similar in nature, but we want to briefly mention some of the main differences. Both sides offer an amazing venue for their clients, but to avoid any confusion throughout this book, when referring to Forex we are talking about today's current cash or spot value of the currency. When we are referring to Futures we will refer to them as currency futures.

Let's do our best to compare apples to apples. The foreign exchange market known informally as Forex, is an over-the-counter (OTC) trading instrument where today's current cash value of one currency is traded for another. It is the most traded market in the world, with an average turnover nearing $4 trillion per day. Unlike other financial markets, the Forex market has no central exchange. It operates through an electronic network of banks where corporations and individuals can access and trade one currency for another. The Forex market operates on a 24-hour basis across each of the world's major financial centers every day.

CURRENCY FUTURES

A futures contract ...