Why Trade in Forex Market

FinanceStocks, Bond & Forex

  • Author Adam Smith
  • Published May 25, 2011
  • Word count 516

With all the markets that are available to you to trade in such as options, the stock exchange or futures, why would you want to trade Forex? The answer is simple. While there is risk with any financial market, trading in Forex can be the easiest of the markets to trade in.

You also have many different advantages to trading in the Forex market. Here is a list of some of the market’s advantages. You will have low transaction costs. The cost for a transaction is usually 0.1 percent under normal market conditions. This will also depend upon your leverage of the market. You also have no commissions to pay in this particular market.

There are no exchange fees, brokerage fees, government fees or clearing fees to pay. This market is also a high liquid market. This means that you can both sell and buy at will and therefore are never stuck in a trade, as you would be in the stock market for example. One high ranking benefit of trading Forex is that there are no middlemen to deal with. You trade directly with the market for what you want at the price that is current.

You also don’t have a fixed lot size as you would in most other markets. For example, to trade silver, the lot size required is 5000 ounces. That is a lot to trade with. The Forex market allows you to determine your own lot size. You are in control of the amount and size that you trade. Here is something that you should know about the Forex Market. The Forex market cannot be controlled by one entity. The market is so big that no one, even big banks or firms can control the market for an extended period of time. This is unlike the stock market for example.

This market is a 24 hour market as stated above. This is unlike the stock markets that usually open at 8 and close at 5. You can trade any time of the day or night without having to worry about the market being closed. This allows you to take advantage of any market currents that may be prevalent at any time by either having an account with a broker that will send you signals or by swing trading. You also have the option of micro trading and mini trading accounts. Depending upon account, you may open one for as little as $300.

The leverage ability is the last benefit we will discuss. Making a small margin deposit can control a bigger contract value. This gives the trader the ability to limit risk and make a nice profit on the market. However, this can be like a sword with a double edge. You have to have proper risk management or you will have the potential for huge losses as well as huge gains. Forex has one more benefit. Most brokers will offer a free "demo account" in order to get you to trade Forex without losing your shirt. These are the reasons why you should trade Forex and why the Forex trade has so much appeal.

If you enjoyed reading this Forex article you might also want knowing more about Forex Market

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