Thursday, September 27, 2007

Benefits of Trading the Forex Market

Trading the Forex market has become 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 answer this question in this article. Also we will discuss come differences between the Forex market, the stocks market and the futures market.

Some of the benefits of trading the Forex market are:

Superior liquidity.

Liquidity is what really makes the Forex market different 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 tremendous 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 around the click market, the market opens on Sunday at 3:00 pm EST when New Zealand begins operations, and closes on Friday at 5:00 pm EST when San Francisco terminates operations. 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 many other markets. Some Forex brokers offer leverage up to 400:1, allowing traders to have only 0.25% in margin 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 margin to be able to open that position.

Low Transaction costs

Almost all 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 investment

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 investment 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 better.

Trading from anywhere.

If you do a lot of traveling, you can trade from anywhere in the world just having an internet connection.

Some of the most important differences between the Forex market and other markets are explained below.

Forex market vs. Equity markets

Liquidity

FX market: Near two trillion dollars of daily volume.

Equity market: Around 200 billion on a daily basis.

Trading hours

FX market: 24hr market, 5.5 days a week.

Equity market: Monday through Friday from 8:30 EST to 5:00 EST.

Profit potential

FX market: In both, rising and falling markets.

Equity market: Most traders/investor profit only from rising markets.

Transaction costs

FX market: Commission free and tight spreads.

Equity market: High Commissions and transaction fees.

Buying power

FX market: Leverage up to 400:1.

Equity market: Leverage from 2:1 to 4:1.

Specialization

FX market: most volume (85%) is made on major currencies (USD, EUR, JPY, GBP, CHF, CAD and AUD.)

Equity market: More than 40,000 stocks to choose from.

Forex market vs. Futures market

Liquidity

FX Market: Near two trillion dollars of daily volume.

Futures market: Around 400 billion dollars on a daily basis.

Transaction costs

FX market: Commission free and tight spreads.

Futures market: High commissions fees.

Margin

FX market: Fixed rate of margin on every position.

Futures market: Different levels of margin on overnight positions than day time positions.

Trade execution

FX market: Instantaneous execution.

Futures market: Inconsistent execution.

All this makes the Forex market very attractive to investors and traders. But I need to make something clear, although the benefits of trading the Forex market are notorious; it is still difficult to make a successful career trading the Forex market. It requires a lot of education, discipline, commitment and patience, as any other market.

3 comments:

miranon said...

HDD Data Recovery
Holland
Metatrader 5
Forex Trading

Forex Signals Trader said...

USA Forex Signal is one of the best forex trading signals and predicts provider website in the world. From the arrival, it is taking steps improved put-on, facility's and preserve rather than new rivals. USA Forex Signal has a largest and professional analyst team to generate in organization signals and forecast to subscribers. USA Forex Signal is providing supper setting support for subscribers to their highest amalgamation of trading. We give sprightly upon major currency EUR/USD, GBP/USD, USD/JPY, USD/CHF as soon as admittance price and exit signals in real time (1or 2/3 mature daily) along with daily & evening forecast. Only USA Forex Signal has faster forex signals relief for subscribers, It will be obsession log-in our website as a paid registered members. We provided our bolster as soon as the guarantee of profit +1200 pips per month. Our risk doling out formulas and philosophy are key to increasing get the bond of and avoid loss. It should be controlled emotion and utilize proper maintenance perspective of view.
USA Forex Signal is serving signals more in addition to 200 countries in the world behind its good relatives. USA Forex Signal has the funds for signals via email, SMS, and website too.
You Visit For Usa forex signals and reliable forex signals service by USA Forex Signal.

Trader Jonson Gilbard said...

Hot Forex Signal Service.
Hot Forex Signal is the best world winning forex signals providers.
Hot Forex Signal Provide forex signals and trade copier service. Hot Forex Signal Also Provide accurate forex signals, free forex trading signals daily, live forex signals without registration, honest forex signals, reliable forex signals, buy forex signals, forex free signals buy sell, best forex trade copier, and so more service.
Hot Forex Signal Package List Below.
Trial
$ 21.1 for 7 days
Professional
$ 68.5 for 1 month
Most Popular Trade Copier
$ 395.60 for 3 months
Ultimate
$ 179.30 for 3 months
Visit For More Information: hotforexsignal.com