Friday, February 3, 2012

Advantages & Benefits of the Forex Market

          Trading the Forex market has become very popular in the last years. Why is it that traders around the world see the Forex market as an investment opportunity? I'll try to answer this question here. Some of the benefits of trading the Forex market are:
Superior liquidity
Liquidity is what really makes the Forex market different from other markets. The Forex market is by far the most liquid financial market in the world with more than 3 trillion dollars traded everyday. This ensures price stability and better trade execution. Allowing traders to open and close transactions with ease. Also such a tremendous volume makes it hard to manipulate the market in an extended manner.

 
24hr Market This one is also one of the greatest advantages of trading Forex. It is an around the click market, the market opens on Sunday at 3:00 pm EST when New Zealand begins operations, and closes on Friday at 5:00 pm EST when San Francisco terminates operations. There are transactions in practically every time zone, allowing active traders to choose at what time to trade.
Leverage trading Trading the Forex Market offers a greater buying power than many other markets. Some Forex brokers offer leverage up to 400:1, allowing traders to have only 0.25% in margin of the total investment. For instance, a trader using 100:1 means that to have a US$100,000 position, only US$1,000 are needed on margin to be able to open that position. Remember leverage is like a double sword, it could work in your favor as well as against you.
Low Transaction costs Almost all brokers offer commission free trading. The only cost traders incur in any transaction is the spread (difference between the buy and sell price of each currency pair). This spread could be as low as 1 pip (the minimum increment in any currency pair) in some pairs.
Low minimum investment The Forex market requires less capital to start trading than any other markets. The initial investment could go as low as $300 USD, depending on leverage offered by the broker. This is a great advantage since Forex traders are able to keep their risk investment to the lowest level.
Specialized trading
The liquidity of the market allows us to focus on just a few instruments (or currency pairs) as our main investments (around 80% of all trading transactions are made on the seven major currencies). Allowing us to monitor, and at the end get to know each instrument better.
Trading from anywhere
If you do a lot of traveling, you can trade from anywhere in the world just having an internet connection.
All these benefits make the Forex market very attractive to investors and traders.We need to make something clear though, even when all these benefits of the Forex market are notorious; it is still difficult to make a successful career trading the Forex market. It requires a lot of education, discipline, commitment and patience.

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