The Advantages of Forex!

The Forex market works 24 hours and 5-1/2 days a week. Because governments, corporates and private individual who require currency exchange services are spread around the world, so trading on the forex market never stops. Activity on the forex market follows the sun around the world, so right from the Monday morning opening in Australia to the afternoon close in New York. At any point of the day you can find an active pair to trade.

 

Go Long or Short:

A trader in forex can trade both ways. It means a forex trader can play the market and make profits irrespective of whether market is going up, down or is in tight range. So irrespective of the event that has triggered the movement – forex traders do not care.

 

Low Transaction Cost:

Most forex accounts trade with little or no commission and there is no exchange or data license fees. Generally, the retail transaction fee (the bid/ask spread) is typically less than 0.1% under normal market conditions. With larger dealers (where volumes are huge), the spread could be as low as 0.05%. Leverage plays a crucial role here.

 

The Leverage:

Leverage is the mechanism by which a trader can take position much larger than the initial investment. Leverage is one more reason why you should trade in forex. Few currency traders realize the advantage of financial leverage available to them. For example, if you are trading in equity market, the maximum leverage a stock broker is offered is 1:2 but in case of forex market, you will get a leverage up to 1:100 and in many parts of the world even higher leverage is available. For this reason, it is not hard to see that why forex trading is so popular.

 

High leverage allows a trader with small investment to trade higher volumes of currencies and thus provide the opportunity to make significant profits from the small movement in the market. However, if the market is against your assumption you might lose significant amount too. Therefore, like any other market, it is a two-way sword.

 

High Liquidity:

The size of forex market is enormousand liquidby nature. High liquidity means a trader can trade with any type of currency. Timing is not a constraint as well; trading can be done as per your convenience. The buyers and sellers across the world accept different types of currencies. In addition, forex market is active 24 hours a day and is closed only on the weekends.

 

Accessibility:

Getting started as a currency trader would not cost a ton of money especially when compared to trading stocks, option or future market. We have online forex brokers offering "mini" or "micro" trading accounts that let you open a trading account with a minimum account deposit of $25. This allows an average individual with very less trading capital to open a forex trading account.