The value of currencies on the other hand is affected by so many factors and
so many participants that the likelihood of any one individual or group of
individuals drastically affecting the value of a currency is minute. Because of
its sheer size, the currency market is hard to manipulate. The ability for
people to engage in 'insider trading' is virtually eliminated. As an average
trader, you are less disadvantaged. You are likely to be playing on relatively
equal ground along with all the other traders and investors whom you are
competing against.
Note about price gaps:
For those people who have already traded other markets, you probably know
about price 'gaps'. 'Gaps' occur when prices 'jump' from one price level to
another without having taken any incremental steps to get there. For example,
you may be trading a share that closes at $10 at the end of today but due to
some event that happens overnight; it opens tomorrow at $5 and continues to go
downwards for the rest of the day.
Gaps bring about another degree of uncertainty that may meddle with a
trader's strategy. Probably one of the most worrying aspects of this is when a
trader uses stop-losses. In this case, if a trader puts a stop-loss at $7
because he no longer wants to be in a trade if the share price hits $7, his
trade will remain open overnight and the trader wakes up tomorrow with a loss
bigger than he may have been prepared for.
