Why Trade Forex: Advantages of Forex Trading
There are many benefits and advantages of trading Forex. Here are just a few reasons why so many people are choosing this market:
No clearing fees, no exchange fees, no government fees, no brokerage fees. Most retail brokers are compensated for their services through something called the “bid/ask spread “. No middlemen Spot currency trading eliminates the middlemen and allows you to trade directly with the market responsible for the pricing on a particular currency pair.
No fixed lot size
In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5,000 ounces.In spot Forex, you determine your own lot, or position size. This allows traders to participate with accounts as small as $25.
A 24-hour market - Forex never sleeps TRADE 24 HOURS, 5 DAYS A WEEK There is no waiting for the opening bell. From the Monday morning opening in Australia to the afternoon close in New York, the Forex market never sleeps.This is awesome for those who want to trade on a part-time basis because you can choose when you want to trade: morning, noon, night, during breakfast, or in your sleep. No one can corner the market The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank) can control the market price for an extended period of time. Leverage Leverage is another reason why you should trade Forex. In Forex trading, a small deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum. For example, a Forex broker may offer 50-to-1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $2,500 worth of currencies. Similarly, with $500 dollars, one could trade with $25,000 dollars and so on. While this is all gravy, let’s remember that leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains. Accessibility Forex can be traded from anywhere where there is an internet connection - it doesn't even require broadband.
Because the Forex market is so enormous, it is also extremely liquid. This is an advantage because it means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will as there will usually be someone in the market willing to take the other side of your trade. You are never “stuck” in a trade. You can even set your online trading platform to automatically close your position once your desired profit level (a limit order) has been reached, and/or close a trade if a trade is going against you (a stop loss order).
Free Stuff Everywhere! Most online Forex brokers offer “demo” accounts to practice trading and build your skills, along with real-time Forex news and charting services. And guess what?! They’re all free! Demo accounts are very valuable resources for those who are “financially hampered” and would like to hone their trading skills with “play money” before opening a live trading account and risking real money.