Why Trade Forex?
Trading forex online has become very demanding since the past decade. The forex market is now one of the fastest emerging markets in the world. What are so awesome about this market are its various benefits and advantages that it offers. Below are some of the reasons why so many people now trade forex.
*24 Hour Trading
* Easy Access
* Low Start-up Cost
* Go Long or Short
* Available Leverage
* Unmatched Liquidity
* Low Trading Cost
* International Exposure
24 Hour Trading
You can trade forex any time of the day or night as ‘Forex Never Sleeps’. On Sunday at 5:00pm EST, trading starts as markets open in Sydney, two hours later, at 7:00pm EST the Tokyo markets opens, then later at 30am EST, followed by London. And lastly, at 8:00am EST New York markets open and then close at 5:00pm EST. When New York trading closes, the Sydney market is back open and these trading cycles goes on until Friday – thus it is a 24 hour seamless session for 5days a week!
Easy Access
With the advancement of internet and high speed internet connection, it has now become very convenient for anyone to trade forex at the comfort of their home. You can execute your trade with a click of your mouse and at the same time, communicate with your broker online.
Low Start-up Cost
It does not cost a lot of money to start as a currency trader but it does make any average individual to have easy access to forex trading. Some online forex brokers offer a minimum account deposit of $25 even though it is not encouraged, while some offer ‘mini’ or ‘micro’ trading accounts. As the start-up cost varies, you can determine your own amount you feel comfortable.
Go Long or Short
There are no restrictions for short selling of currencies as it is subjected to available liquidity unlike other financial or equity markets where it is not easy to sell short. If you find that a certain currency will go up or long, buy it. If you find it will fall or short, sell it. In another meaning, there is no ‘bear market’ in forex – you either make or lose money any time since you have equal access to trade either way.
Available Leverage
With the available leverage, your small start-up deposit can control a much bigger total contract value such as 50:1 ratio. Leverage allows you the ability to make big profits and subsequently, keep track of your risk capital to a minimum. However, leverage works both ways without appropriate risk management as this sizable leverage might either leads you to immense losses or gains.
Unmatched Liquidity
Since the forex market is extremely liquid and so huge with an average of $5.3 trillion traded daily, it can easily accommodate any trading volume and transaction sizes. You can never get ‘stuck’ in a trade as it allows you to instantly get in and out of the trade effortlessly at any time.
Because of its unmatched liquidity, it is less prone to slippage and is also unlikely for any big time players to manipulate the prices to their advantage for an extended period of time.
Low Trading Cost
Nowadays, most forex brokers do not charge commission or any other additional transaction fees to trade instead they are compensated for their services in a form of bid/ask spread. Even if in certain cases you were required to pay commissions, it will be very minimal compared to other future markets. The competition among the forex brokers is so intense that you will probably get the best quotes and very favorable transaction costs.
International Exposure
With the advent of globalization, investors are now searching for opportunities anywhere they can. If you intend to invest in another country, forex trading is the other alternative for you to gain exposure and at the same time avoid unexpected changes such as foreign securities laws and financial documents in other languages.
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