Forex trading offers numerous advantages.
Advantages of Forex Trading
This market is the top priority amongst people due to the following reasons:
No Commissions
Forex offers “Bid/Ask Spread” to its retail brokers in order to reimburse them for their services. Additionally, there are no brokerage, government, exchange or clearing fees.
No Middlemen
This market offers a platform where trading takes place directly and without involving middlemen or agent. The individuals get a chance to get in touch with the market for spot trading purposes.
No Fixed Lot Size
The exchanges determine the contract or lot size in the futures market. As far as major currencies are considered, the contract size of the futures is 125,000.
The position size or lot is determined by the people themselves in spot forex. It enable the users to begin trading with as low as $30 in their accounts.
Low Transaction Costs
The normal market conditions restricts the retail transaction cost (ask spread/the bid) to under 0.1%. The spread could be as less as 0.07% in the larger transactions. However, this also depends on your leverage.
A 24-Hour Market
The users are provided with yet another feature which is the 24/7 open market. No matter which country you belong to, you’ll never have to watch the clock waiting for the forex market to open.
This way the participants with jobs can decide their own time to trade.
There Is No Cornering the Forex Market
The forex market price simply cannot be controlled by a single entity no matter how big it is. This is because of the massive participant and market size.
Leverage
The large contract value, no matter how big, can be controlled with a small amount, in Forex. The risk capital can be minimized and the participants may be able to make profits with Leverage.
For instance, 50-to1 leverage maybe offered by a forex broker, which implies the participant can sell or buy currencies of up to $2,500 with only $50 margin deposit.
NOTE: This may sound appealing but leverage can have favorable as well as unfavorable outcomes. One may be exposed to high losses or gains if the risk is not managed in a proper way.
High Liquidity
The forex market is unbelievably liquid due to its massive size. This enables the buyer to sell or buy at any time without worrying about liquidity.
You can set up an online trading account that automatically stops the position when it reaches the preferred profit level (limited account) and / or close the transaction if you’re not pleased with it.
Easy Entry
As opposed to what people may think, you don’t need a lot of money to get started on forex. There are macro and mini trading accounts which require as less as $25 to be set up.
You can open the account with as much deposit as you want but the low deposit cost makes it easier and possible for those who don’t have a lot to invest in the beginning.
Free Stuff Everywhere!
In order to enhance your trading skills, demo accounts are offered by offered by the brokers at forex. They also provide the users with updates regarding the forex market.
The advantages of trading at forex market are greater than that of the stock market. Now you know why!
