Benefits of Forex currency trading
There are a number of benefits and advantages for trading in the Forex markets. Below are a few reasons why many people choose to trade in this market over others.
24 hour trading
Forex trades 24 hours a day, all across the world. Each day begins in Sydney, then travels across the world to Tokyo, London, and then finally New York. You won't hear the closing or opening market bells, and there is no central market. Traders can base their decisions upon economic, political and social events at the time they happen – day or night. Making it a perfect market for those that want to trade on a part-time basis because you have complete control over when you want to trade.
Unlike other markets, the foreign exchange has no government fees, no brokerage fees, no exchange fees and even no clearing fees. Brokers are instead compensated for their services by what is called a ''spread''.
High leverage margins
When trading in the Forex markets you often have many leverage options to choose from. These allow a trader to make a small deposit, but control a large contract value. Therefore allowing them to make a nice profit with little up front capital, and keep capital risk to a minimum. Many Forex brokers offer leverage options of 50, 100, 150, or even 200 to 1 of trade margin. For example, a $100 in a 100:1 Forex account will give you the purchase power of $10,000 in the actual currency market. High leverage is not suited to everyone, but the various options available from online currency trading firms can make leverage a powerful, moneymaking tool. Just remember that a higher leverage means you are susceptible to large losses as well as gains.
Flexibility to trade from anywhere in the world
The explosion of the internet has allowed Forex traders so enjoy almost complete freedom. A computer with an internet connection, combined with an active Forex trading account from one of the many brokers allows you to execute trades from anywhere in the world. Both professional and personal Forex traders have the luxury of travelling around the world, yet still remain connected to the market virtually, no matter where they are. This type of freedom is something you could not get else where by being an employee of a large cooperation.
High level of liquidity
The Forex market is huge, trading on average $3.98 trillion every single day. With its enormous size comes high liquidity. This means that with a single click on your mouse, you can instantly buy or sell a currency pair. Allowing traders to easily cash in or cash out their capital. Traders can even utilise automatic tools on their online trading platform to close trading positions once a desired level has been reached. For example a trader could set a trade to close once they reach ''x'' profit, called a limit order, or close a trade once they lose ''y'' amount, called a stop loss order.
Ability to practice without risk
You will find the most online Forex brokers offer you the chance to use a ''demo'' account to practice trading, build up your skills and get an understanding of how the markets work before jumping straight in with your own hard earned cash. These demo accounts allow you to trade alongside real-time forex news and utilise a range of charts and tools, just like you would with a live account.