Advantages Of Forex Trading
For those of you who are sitting on the fence and thinking if you should get into Spot Forex trading, let me list out all the advantages of Forex trading and you decide for yourself over the pros and cons if you should join the fray.
What Are The Advantages of Forex Trading
- It’s a 24 hour market.
The spot Forex market has no physical location of central exchange as compared to other financial markets such as the London Stock Exchange or the New York Stock Exchange. It is considered to be a over-the-counter “OTC” market because it’s run electronically within a network over a 24 hour period. From Monday morning open in Australia till the Friday afternoon close in New York, the Forex market is open to anyone who wants to trade at whatever time that is convenient.
- It’s Considered A Perfect Market
It doesn’t matter if the currency is rising or falling, everyone has an equal opportunity to trade and make a profit either by buying or selling the currency.
- High Liquity And Market Cannot Be Cornered
The Forex market is the biggest and most popular in the world to date, open to all and it’s so huge with so many traders, it means high liquidity and not one single entity has the ability to control the price for an extended period of time.
- Trading Time And Location Flexibility
Since the Forex market is open 24 hours a day, you have flexibility to trade the market when you choose to and don’t have to fix your schedule to the market. You can also choose to trade wherever you want as long as you have an internet connection. Nowadays, besides using a laptop to execute your trade, Smart phones can also do that and there are also some trades who trade using computers in internet cafes.
- There’s No Fixed Lot Size
In the spot Forex market, you decide how big or how small a position you want to trade.
- Low Entry Level
You don’t need a lot of money to open a trading account, in fact, it requires to lowest amount of money as compared to other investment options to get yourself started in Forex trading. In fact, some brokers require only $1 deposit to open a micro trading account! But this doesn’t mean you should open an account with $1 although it makes things very accessible to any average person who doesn’t have a high start-up trading capital.
- Leverage.
A small deposit allows you to control a large contract value because of the high leverage in forex trading. Although leverage can work in your favor, it can also work against you without the right risk management in place. The high leverage can result in large gain as well as large losses.
- Minimal Or No Commissions
There’s no clearing, exchange, government or brokerage fees. Most of the retail brokers earn their keep from the bid-ask spread. The spread differ from broker to broker for different currency pair though.
- No Middlemen
There’s no middlemen in spot Forex thus allowing you to trade directly and chances are prices are what you see is what you get although that is not always true because of possibility of slippage during high volatile market movement and you could be face with “trade context is busy” thus not allowing you to execute your trade at the price that you want.
- Free Stuff Everywhere!
Last but not least, most online Forex brokers offer free demo accounts, funding your demo trading account with virtual money for you to practice your trading to build up your confidence and hon your skills and getting use to the trading platform before you actually go “live” with a live trading account.
There are also lots of free strategies, indicators and expert advisors (EA) available for MT4 that you can lay your hands on if you search for them.
Encouraged By The Advantages Of Forex Trading Yet?
I believe I have listed out all the Advantages and of Forex Trading here and may have miss out some points along the way. Anyway, are the advantages above enough to convince you that you should join in too?
Not so fast! Even though there are many advantages of Forex trading, you mustn’t overlook the Disadvantages of Forex Trading too. Check out the disadvantages and then decide if you should get into Forex trading yourself.
Good luck and safe trading!
