Forex Trading- You Have Heard That's it Great- so What are the Benefits?

Benefits of Forex Trading

Trading the Forex market has grew very popular in the last years. Why is it that traders around the world see the Forex market as an investment opportunity? We will try to respond this question in this article. Also we will hash out come differences between the Forex market, the stocks market and the futures market.

Some of the Gains of trading the Forex market are:

Superior liquidity

Liquidity is what really makes the Forex market various from other markets. The Forex market is by far the most liquid financial market in the world with nearly 2 trillion dollars traded everyday. This ensures price stability and better trade execution. Allowing traders to open and close transactions with ease. Also such a great 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 round the click market, the market opens for approximately 6 days a week. Which is a major benefit as it does not close during this time. Which unlike with stocks you do not get the gapping down in the forex market. This is why so many people are moving into forex trading as their preferred option. 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 numerous other markets. Some Forex brokers offer leverage up to 400:1, allowing traders to have single 0.25% in security deposit 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 allowance to be able to open that position.

Low Transaction costs

Almost every 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 investing

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 investing 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 (85% of all trading transactions are made on the seven major currencies). Allowing us to monitor, and at the end get to know each instrument well.