Remember that hit movie ?Lost in Translation,? in which a clueless Bill Murray wanders dumbstruck through the foreign and thoroughly baffling world of modern-day Tokyo? That?s the look that comes over many forex traders when they try to get their head around the Internal Revenue Code as it relates to foreign exchange trading.
Forex is the world?s largest and most liquid market, with a daily currency dollar volume of more than $1.4 trillion. Once primarily traded by banks and other financial institutions, forex opened to individual traders in the mid-1980s and became widely popular when trading exploded in the nineties. Forex can be lucrative indeed for traders who know how to capitalize on the rise and fall of various currencies.
Forex is traded in two ways: as cash forex, which trades on the unregulated interbank market, and as currency futures, which trade on regulated commodities exchanges. Here we refer to cash forex traders as currency traders and currency futures traders as...
