With the foreign currency market-Forex or FX market-traders will not pay a commission for their trades. Instead the cost of the trade is the spread between the asking price and the bid price. The minimal price movement for a currency is called a pip--.0001--and spreads are measured in pips. For example, a quote for the USD/CAD 1.2571/74 would have a spread of three pips. This quote would also indicate that one US dollar was worth 1.25 Canadian dollars.
The FX market is a 24 hour marketplace. Each session begins in Sydney and rotates around the globe as the business day begins at each financial center. There isn't a central exchange floor like with stocks, bonds, and futures. The FX market is a true "over the counter" market where trades occur directly between parties through electronic networks or over the telephone. Unlike stocks, which have the S.E.C. governing stock trading, there is no regulatory agency in charge of the currency market. Governments have been known to intervene from time to time if the market becomes disorderly. For the most part, however, their actions are limited and are intended to have a psychological impact on the market. The sheer size of the currency market--$1.4 trillion daily turnover--would make it very difficult for unscrupulous individuals to manipulate it.The Internet has allowed individual unprecedented access to the FX market. There are several online Forex brokers that will let you open an account with less than $1,000. Since trading costs are minimal, it isn't cost prohibitive to trade a small amount. Online brokers will provide trading platforms that will include you need to place trades and manage your account.
