Why trade Forex ?
The foreign exchange market (Forex, FX, or currency market) is a global decentralized market
for the trading of currencies. The main participants in this market are the larger international
banks. Financial centers around the world function as anchors of trading between a wide range
of different types of buyers and sellers around the clock, with the exception of weekends.
There are many advantages in trading Forex. Here are a few reason for why people trade
Forex:
1. Forex is the largest financial market in the world
The Forex market is considered to be the largest financial market in the world. Because the
currency markets are large and liquid, they are believed to be the most efficient financial
markets. It is important to realize that the foreign exchange market is not a single exchange,
but is constructed of a global network of computers that connects participants from all parts of
the
world. It has a huge trading volume representing the largest asset class in the world leading to
high liquidity.
2. Markets are open 24 hours a day, 5 days a week
The Forex market has continuous operation: 24 hours a day except weekends.The Forex
market never sleeps. 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.
3. Highest liquidity
The foreign exchange market is the most liquid financial market in the world. Traders include
large banks, central banks, institutional investors, currency speculators, corporations,
governments, other financial institutions, and retail investors. The average daily turnover in
the global foreign exchange and related markets is continuously growing. According to the
Central
Bank Survey coordinated by the Bank for International Settlements average daily turnover was
$5.2 trillion in 2018
4. High Leverage
In Forex trading, a small margin deposit can control a much larger total contract value. For
example, a Forex broker may offer leverage of 1:500, which means that a $100 dollar margin
deposit would enable a trader to buy or sell $50000 worth of currencies. Similarly, with $500
dollars, one could trade with $250000 dollars and so on. Remember this high degree of
leverage can lead to large gains as well as losses
5. No additional commission and low trading cost
Trading Forex has much lower transaction costs than other investment products. Most Forex
accounts trade without a commission and there are no expensive exchange fees or data
licenses. Traders just pay the spread (the difference between the buying price and the selling
price) to enter the market. This spread can be wide and is a significant cost of trading which
is always displayed on your trading screen.
6. Ease of access
The Forex market is the largest and most liquid market in the world, it has become one of the
most popular markets to trade globally due to its ease of access and availability. Online Forex
brokers give traders of all levels easy access to forex trading platforms, meaning that the
world of online trading has never been more accessible.