Forex Trading Forex Market Benefits
Forex Trading Forex Market Benefits
Trading in the Forex market has become very popular in recent years. Why is it that traders around the world see the Forex market investment opportunity? We try to answer this question in this article. We also discuss the differences between the Forex market from the stock market and futures market.
Some of the advantages of trading on the foreign exchange market are:
Superior liquidity.
Liquidity is what really makes the Forex market is different from other markets. Forex market is by far the most liquid financial markets in the world for almost two trillion dollars a day. This ensures price stability and better trade execution. Allows traders to open and close transactions with ease. Also so much more difficult to manipulate the market in an enlarged manner.
24-hour market.
This is also one of the biggest advantages of forex trading. It is a turn around the click market, the market will be opened on Sunday at 3:00 p. m. ET clock, when the New Zealand operations to begin, and ends on Friday at 05:00 EST when San Francisco to stop its operations. There are stores in almost every time zone, the active traders to choose at any time of the trade.
Leverage trading.
Trading in the Forex market has a higher purchasing power than in many other markets.Some Forex brokers offer the advantage of up to 400:1, so that the trader is only 0.25% of total investments from the edge. For example, a trader 100:1 means that a $ 100,000 position, only $ 1,000 is required at the border, so that you can open this drive.
Low transaction costs.
Almost all brokers offer a Commission-free trading. Only the costs arising from the transaction, the dealer distributes (the difference between buying and selling prices for each currency pair) is. This spread could be as low as 1 PIP (the smallest increase in any currency pair) in some pairs.
Low minimum investment.
Forex market re quires less capital to trade than anything else on the market will begin. The initial investment can go up to offer $ 300 dollars, depending on the advantage through a broker. This is a great advantage, because the ability to keep their forex risk of investment low.
Specializes in the trade.
Liquidity in the market to give us (or 85% of all commercial transactions in seven major currencies), a few instruments (or currencies) compared to our investment. Allows us to follow, and eventually get to know each instrument better.
Trade from anywhere.
If you travel a lot, you can work anywhere in the world with the Department of Commerce's Internet connection.
Some of the major differences between the Forex market and other markets are explained below.
Forex market versus equity market
Liquidity
The FX market: Near two trillion U.S. dollars daily volume.
Stock exchange: roughly 200 billion on a daily basis.
Trading Hours
The FX market: the 24-hour market, 5.5 days a week.
Stock Exchange: 8:30 to 5:00 ET, Monday through Friday EST.
Profit opportunities
The FX market: In both, rising and falling markets.
Stock market: Most traders / investor profit only in emerging markets.
Transaction costs are
The FX market: Commission free and tight spreads.
Stock Exchange: high fees and service charges.
Purchasing power
The FX market: Leverage up to 400:1.
Stock Exchange: the leverage effect at 2.01 bis 04.01.
Specialization
The FX market: most volume (85%) are other major currencies (USD, EUR, JPY, GBP, CHF, CAD and AUD.)
Stock exchange: more than 40,000 shares, of which to choose.
Forex markets versus futures markets
Liquidity
The FX market: Near two trillion U.S. dollars daily volume.
Futures market: about $ 400 billion on a daily basis.
Transaction costs are
The FX market: Commission free and tight spreads.
Futures market: the high commission fees.
Margin
The FX market: a fixed margin in all positions.
Futures market: Different margin overnight positions than day rates.
Implementation
The FX market: immediate execution.
Futures Markets: Conflicting implementation.
All this makes the foreign exchange market very attractive for investors and traders. But I have to find something, even if the benefits of trading the currency markets are known, it is still difficult to make a successful career trading the Forex market. It requires a lot of training, discipline, commitment and patience, as well as other markets.
