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Forex is changing rapidly these days. 5 years ago, traders were doing a lot of guesswork, trying to predict who will win, the US Dollar or the common Euro currency. Now the question has changed. Will the Euro survive the eurozone crisis and what will happen to the US Dollar, which is weakened by the astronomic US public debt and the overall weakness of the US economy? What will happen to other major currencies?

 

 

While major currencies are suffering from multiple problems, this is the perfect time for Forex traders to make money. Markets go volatile while traders and investors need to insure their capital against multiple risks. These factors stimulate all the participants of the global currency market. Forex is gaining strength. Each year the turnover grows by 5-10%. Today, the daily turnover of the Forex market is equal to $4 trillion.

 

The retail market is growing even faster – 10-20% a year. Today, its daily turnover exceeds $300 bn. Individuals are getting more interested in currencies as the market volatility is growing as well. Trading currencies has become much easier with multiple trading terminals, even for mobile devices. High competitiveness in the Forex broking industry drives the improvement of products and services offered to traders and investors.

 

Most traders (95-99%) lose mainly due to the lack of financial literacy, experience and necessary skills. Dirty brokers and dealing centers benefit from it. They know the statistics and therefore don’t place their clients’ orders in the interbank market, thus hedging them inside their systems. One client’s profit is another client’s loss. It is hard to make money with such brokers as they provide low-quality services and poor execution of orders, not to mention endless slippage, re-quotes and non-market quotes.

 

Such broking companies are not interested in cooperating with successful traders. They prefer losers. Most of them stop trading after losing one or several deposits. Dirty brokers receive losers’ money. That is why they constantly need new victims.

 

 

Private investors are getting increasingly interested in currencies. Banks couldn’t but notice the fact. That is why some of them start entering the industry.

 

According to Alexander Krasnyi, a currency strategist for Alfa Bank, banks have a completely different approach to trading Forex. We can even say there is a new niche in the Forex trading industry – Banking Forex.

 

While managing risks, banks hedge all the orders placed by their clients, even minor ones. Their interest is a tiny margin (usually, $10-15 for every $1.000.000). They add it to the overall currency flow of online liquidity obtained from the world’s major financial giants - Deutsche, HSBC, Credit Suisse etc. That is why their quotation is extremely close to the market (the difference is the very margin). They are not shifted against the client sentiment. Sometimes the client’s trades are met (one sells, another one buys). The more active clients a certain bank has, the more frequently such situations occur.

 

With such a business model, banks are interested in successful and professional traders who could generate stable profits for themselves and the bank.

 

 

On the face of it, a bank’s offer may seem less beneficial than trading with a conventional broker. However, as opposed to non-regulated non-banking financial institutions like brokers and dealing centers, banks are regulated and monitored by financial watchdogs. Obviously, it is much more difficult to open a trading account with banks. The same holds true for deposit/withdrawal because they are forced to monitor your financial activity to prevent money laundering, frauds etc. Therefore, banks are way more reliable than conventional brokers.

 

Multiple brokers allow their private clients to trade for borrowed funds with high leverage. Banks are more demanding about the minimal initial deposit and offer low leverage.

 

However, don’t fall for the excessive loyalty of some broking companies. The higher the leverage is, the higher the chances that you will lose your entire deposit are. This is because big leverage will temp you into trading big lots, thus making you jeopardize your initial deposit due to high margin requirements.

 

Moreover, banks are closer to the real interbank currency exchange market, thus offering higher liquidity and more beneficial trading conditions.

 

These days, technologies keep improving trading services every day. Banks have already inherited the best standards and technologies and are ready to compete with conventional brokers, providing high-quality trading services.

For example, Alfa Bank offers its own Forex trading service through the popular MetaTrader 5 trading platform. Alfa Bank is Russia’s biggest private bank with over $20 billion of annual turnover. The amount of clients grows by 15-20% every single month.

 

Banking Forex is a new stage in the evolution of the Forex trading industry. So why not becoming a part of it?

 

For more details, please, visit http://www.alfaforex.com/