Forex trading is one of the biggest and the most liquid markets in the world. The amount of daily transactions in the Forex market is a staggering $4 trillion USD. Out of this amount. $1.5 trillion comes from spot trading.
1. 24*7 Market
The biggest advantage of a forex market is that is keeps running 24 hours a day and seven days a week. The operational timings of various markets around the world have overlapping times with various time zones. This makes the market to be online and running all through the week.
2. Highly Liquid
Forex market is the most liquid market in the world and thus promoting large volumes of currency trading. It has eliminated manipulation of price and promotes competent pricing.
3. Low Cost of Transactions
The spread between the bid and ask price is very less. This increases the competition and decreases the brokerage cost. Forex, being an OTC (over the counter) trading does not have any regulator and thus is the most cost effective means of investment.
4. Leverage
Leverage is used to increase the returns on an investment. It is done by using various types of financial instruments like options, futures and margin accounts. Leverage is used by companies to increase the shareholder value and profit themselves from fluctuation in exchange rates.
5. Potential of Profit From Rising and Falling Prices
Forex market is dynamic in nature and is continuously changing. Sudden rise and fall in prices of currencies against one another is what benefits the traders as well as the customers.
6. Short Selling
Short selling is a currency derivative. It is an agreement between pair of currencies for their exchange at a predefined time and conditions. Profit can be made when you are able to buy back the currency for less than you sold it.
7. Individual Control
A career and investing in forex trading is advantageous as the individual managing/investing has complete control with the trades he/she makes. It is always the decision of the buyer or seller to go ahead with the trade or not.
8. Transparent Working
Forex market being the highest in the amount involved in trading during the day, still has a very transparent working. All the information is available and can be accessed by everyone.
9. Range of options
There are various types of investment options that can be involved in forex trading. They range from stop trade, futures agreements and options.
10. Good gains
The returns for investing in a forex market are greater than any other financial market. In Spite of a small investment amount, the investor can get large gains in forex market.
11. No Central Exchange Involved
There is no central exchange for Forex market as it is an OTC market. Regulators intervene only during crisis like situations. Forex market is not affected by the sudden fall in the share price for companies and so is sudden huge fluctuations proof.
12. Confidence Boosting
Investor confidence level increases when they earn good profits. This confidence increases more traffic in the Forex market as more and more investors invest in it. This increases in increasing the amount of money invested in the Forex market and thus increasing profits.
13. Flexible Trading Options
Forex market provides a range of investments. There is no limit on the amount that can be invested. You may start from $100 to $1000. It is said that lesser amount investments result in better returns.
14. Demo Accounts for Newcomers
Demo accounts are provided by brokers for investors. This helps the investors to have an actual feel how the Forex trading works. It is a practice account. There are no restrictions applicable on this type of account and you can trade using this account for as long as you desire.
15. Technological Advancements
Forex market is equipped with the latest technological advancements along with newest trading platforms. There are many third party softwares like MetaTrader4 which provide useful trading extensions. Forex trading platforms are also available for your Android and iOS devices.
16. Easily Accessible for All
As Forex trading has all the above advantages, it is an investment option for all. Everyone can invest in various investment types in Forex market and get good returns. People from all walks of life can invest in Forex. Have a look at the gifographic shared by Axitrader.
The forex market is the largest and most liquid of the financial markets. Daily activity often exceeds $4 trillion USD a day, with over $1.5 trillion of that conducted in the form of spot trading. Forex spot trades consist of a contract to trade a given amount of a currency pair derivative with a market-maker, at the advertised buy/sell price (the spot rate).
The liquidity in FX market is one of the major factors for gaining profits for investors. Due to liquidation, positions can be opened & closed within a minute interval or the position can sustain for months. Every trader should have the knowledge of the basics of Forex Trading.
Profit potential from rising and falling prices is an extreme benefit because the hindrance of short selling that we see in other markets like futures, options, and stocks are not seen in the Forex market. Such ease and selling a market short can make it much easier for a trader to become path dependent and not hope that the market will eventually move back in their favor.