WHY TO TRADE FOREX

ADVANTAGES OF FOREX TRADING

There are a lot of advantages and befits of trading Forex. Here are just a few factors included why so many people are choosing the market:

No commissions

 There is no clearing fees, no exchange fees, no government fees, and no brokerage fees for the market. Most of the retail brokers are recompensed for their services through something called the “bid-ask spread“.

No middle-men

 You need not any middle-man in Spot currency trading which allow you to trade directly with the market responsible for the pricing on a certain currency pairs.

No fixed lot size

A lot or contract sizes are determined by the exchanges in the futures markets. A standard-size contract for silver futures cost 5,000 ounces. In spot FOREX, you have to determine your own lot, or position size. For this, tradesman can participate with accounts as small as $25 (though we are going to explain it later why a $25 account is a bad idea).

Low transaction costs

In fact, the retail transaction cost (the bid/ask spread) 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 upon the leverage and related things that you belongs to. We are going to explain it later.

A 24-hour market

You need not wait for the opening bell. From the Sunday morning opening in Australia to the afternoon close in New York, the FOREX market doesn’t sleep. This is awesome for those who want to trade on a part-time basis, because you can choose when you want to trade: morning, noon, night, during breakfast, or in your sleep.

No one can corner the market

The foreign exchange market is so huge 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

A small deposit can control a much larger total contract value in FOREX trading. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum.
For example, a FOREX broker may offer 50-to-1 leverage, which refers that a $50 dollar margin deposit would enable a trader to buy or sell $2,500 worth of currencies. Similarly, with $500 dollars, one could trade with $25,000 dollars and so on. As this is all gravy, let’s remember that leverage is a double-edged sword. If its risk cannot be managed properly, this high degree of leverage can lead to large losses as well as gains.

High Liquidity.

Because the FOREX market is so enormous, 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 there will usually be someone in 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 (a stop loss order).

Low Barriers to Entry

You would think that getting started as a currency trader would cost a ton of money. The fact is, when compared to trading stocks, options or futures, it doesn’t. Online FOREX brokers offer “mini” and “micro” trading accounts, some with a minimum account deposit of $25.
We’re not saying you should open an account with the bare minimum, but it does make forex trading much more accessible to the average individual who doesn’t have a lot of start-up trading capital.

Free Stuff Everywhere!

Almost all of the online FOREX brokers offer “demo” accounts to practice trading and build your skills, along with real-time FOREX news and charting services.
And guess what?! They’re all free!
Demo accounts are very expensive resources for the “financially hampered people” and would like to hone their trading skills with “play money” before opening a live trading account and risking real money.

Now, you know the advantages of the FOREX market, lets’ see how it compares with the stock market!