Benefits of Trading Forex
There are several aspects that makes Forex trading advantageous.
1. 24-Hour market
Forex market is a true 24-hour market from Sunday 5:00 PM ET to Friday 5:00 PM ET. Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday.
2. High level of liquidity
Liquidity is an asset’s ability to be sold without significant movements in the price. In Forex liquidity means that large amounts of money can be moved in and out of foreign currency with minimum price movement.
3. Low transaction cost
Transaction cost in Forex is very low. It is otherwise called the “spread”. The spread is the difference between buying and selling price.
4. Benefit from leverage
Traders can trade currencies using leverage. Leverage is the ability to trade more money on the market than what is actually in the trader’s account. For example, if you are trading with leverage 50:1, you can trade $50 on the market for every $1 in your account. This allows you to trade of $50,000 using only $1000 of capital.
5. Potential profit from price fluctuations
There is no restriction for directional trading in currency exchange market. This means that if you predict that a currency pair is going to increase its value you can buy it (“go long”). Also, if you predict that a currency pair is going to decrease in value you can sell it (“go short”).