WHY WOULD YOU TRADE THE FOREX?There are several advantages and benefits of trading the Forex market. Traders across the globe are discovering the new skill of trading in the non-exchange FX market. Take some time to research some of the advantages of the world’s largest market below:
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Liquidity
With $3.2 trillion changing hands every day, the Forex market is extremelyliquid. Whether it is 12PM or 12AM, there are always traders willing to buy andsell foreign currencies. With the click of a mouse you can buy or sell any currency pair.
Leverage
Investors are able to trade currency pairs on a highly leveraged basis – up to 200 times their investment. For example, an investmentof $250 would allow a trader to control up to $100,000 of any particularcurrency. Leverage allows the trader to increase their position in the marketplace, however the high degree of leverage can work against you as well as for you. Leverage that is high may lead to large gains as well as large losses.
Forex Market provides an alternative to trade financial markets. (buyersand sellers market)
Currencies trade in ISO pairs; a country’s currency has value that isrelative to the currency of another country. The most popular currency pair isthe EUR/USD pair, followed by the GBP/USD pair. When you go long (buy) the GBP/USD,you are buying the Pound as you simultaneously sell the US Dollar. When you goshort (sell) the GBP/USD, you sell the Pound as you simultaneously buy the USDollar. It is just as simple to trade mechanically byeither selling or buying. You have the opportunityto profit or lose either way.
Low Transactional Costs
The Forex market is the most cost efficient market to trade. Exchange fees are non existent due to thefact that the Forex is only traded online and not in a fixed location. The onlyfees you pay are spreads: the difference between the bid and asked price forthe currency pair. The spread cost can be as low as 1-2 pips.
Low Account Minimums Individuals can open a live trading account with as little as $250 dependantupon their broker (FDM) of choice.
FREE ‘Demo’ Trading Accounts
Most Forex brokers will allow you to open a free ‘demo’ trading account. A‘demo’ account works just like a ‘live’ account except that you do not depositany money into the account. The broker funds the account with ‘demo’ or playmoney. This is a smart way if you are new to the market to get the mechanics oftrading down before you ever put any of your own risk capital at play in themarket. |