Why Trade Forex - Advantages Of Forex Trading
There are many benefits and advantages of currency trading. These are just some of the reasons why so many people are choosing this market:
No commissions
No compensation expense, no exchange fees, no government fees, no brokerage fees. Most brokers retail are compensated for their services through something called the "spread".
No intermediaries
The spot currency trading eliminates the middleman 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 5000 ounces. In spot Forex, you determine your own fate, or position size. This allows traders to participate with accounts as small as $ 25 (although we explain later why a $ 25 is a bad idea).
Low transaction costs
The sale price of the transaction (buy / sell) is typically less than 0.1% under normal market conditions. At larger dealers, the spread could be as low as 0.07%. Of course, this depends on its leverage and all will be explained later.
A 24-hour market
No waiting for the opening bell. Since the opening Monday morning in Australia for the afternoon near 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, afternoon, evening, over breakfast, or his dream.
No one can corner the market
The forex market is so large and has so many participants that no single entity (not even a central bank or the mighty Chuck Norris himself) can control the market price for an extended period of time.
Leverage
In forex trading, a small deposit can control a total contract value much higher. Leverage gives the trader the ability to make good profits and at the same time keep risk capital to a minimum.
For example, a forex broker can offer 50 to 1 leverage, which means that a dollar margin deposit $ 50 would allow a trader to buy or sell $ 2,500 in coins. Similarly, with $ 500 dollars, one could trade with $ 25,000 and so on. While all this is gravy, remember that leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large gains and losses.
High liquidity.
Because the forex market is so huge, 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 usually there will be someone on 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 (an order stop loss).
Low Barriers to Entry
You might think that to start as a currency trader would cost a lot of money. The fact is, compared to trading stocks, options or futures, it does not. Forex brokers offer online trading accounts "Mini" and "micro", some with a minimum account deposit of $ 25.
We're not saying you should open an account with the minimum, but makes forex trading more accessible to the average individual who does not have a lot of initial trading capital.
Free stuff everywhere!
Most online forex brokers offer accounts "demo" for practice trading and building their skills, in addition to real-time forex news and charting services.
And guess what?! All are free!
Demo accounts are very valuable for those who are "hampered financially" and would like to hone their trading skills with "play money" before opening a live account and risking real money resources.
Now that you know the advantages of the Forex market, see how it compares to the stock market!
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Why Trade Forex - Advantages Of Forex Trading
There are many benefits and advantages of currency trading. These are just some of the reasons why so many people are choosing this market:
No commissions
No compensation expense, no exchange fees, no government fees, no brokerage fees. Most brokers retail are compensated for their services through something called the "spread".
No intermediaries
The spot currency trading eliminates the middleman 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 5000 ounces. In spot Forex, you determine your own fate, or position size. This allows traders to participate with accounts as small as $ 25 (although we explain later why a $ 25 is a bad idea).
Low transaction costs
The sale price of the transaction (buy / sell) is typically less than 0.1% under normal market conditions. At larger dealers, the spread could be as low as 0.07%. Of course, this depends on its leverage and all will be explained later.
A 24-hour market
No waiting for the opening bell. Since the opening Monday morning in Australia for the afternoon near 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, afternoon, evening, over breakfast, or his dream.
No one can corner the market
The forex market is so large and has so many participants that no single entity (not even a central bank or the mighty Chuck Norris himself) can control the market price for an extended period of time.
Leverage
In forex trading, a small deposit can control a total contract value much higher. Leverage gives the trader the ability to make good profits and at the same time keep risk capital to a minimum.
For example, a forex broker can offer 50 to 1 leverage, which means that a dollar margin deposit $ 50 would allow a trader to buy or sell $ 2,500 in coins. Similarly, with $ 500 dollars, one could trade with $ 25,000 and so on. While all this is gravy, remember that leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large gains and losses.
High liquidity.
Because the forex market is so huge, 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 usually there will be someone on 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 (an order stop loss).
Low Barriers to Entry
You might think that to start as a currency trader would cost a lot of money. The fact is, compared to trading stocks, options or futures, it does not. Forex brokers offer online trading accounts "Mini" and "micro", some with a minimum account deposit of $ 25.
We're not saying you should open an account with the minimum, but makes forex trading more accessible to the average individual who does not have a lot of initial trading capital.
Free stuff everywhere!
Most online forex brokers offer accounts "demo" for practice trading and building their skills, in addition to real-time forex news and charting services.
And guess what?! All are free!
Demo accounts are very valuable for those who are "hampered financially" and would like to hone their trading skills with "play money" before opening a live account and risking real money resources.
Now that you know the advantages of the Forex market, see how it compares to the stock market!
why trade forex
why trade forex with daily charts
why trade forex instead of stocks
why trade forex with daily charts
why trade forex instead of stocks
why trade forex
why do banks trade forex
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why trade the 1 hour forex chart
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why trade forex with daily charts
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