Learn Forex Trading - 5
Reasons To Trade In Worldwide Currencies
The Forex market (or foreign exchange market) offers
unparalleled advantages to investors today and there are
many reasons for choosing to trade in worldwide
currencies. Here are just five of the reasons for
choosing to trade in global currencies:
The 24 Hour Nature Of The Market
Unlike many of the world's trading markets which
operate from fixed trading centers and within strict
hours, often limited to as few as five or six hours a
day five days a week, the Forex market is open 24 hours
Not only does this mean that traders can take
advantage of international events, reacting literally as
they happen, but it also means that traders can
determine their own working day and trading hours. If it
suits you to work in the mornings then that's fine but,
equally, you are free to trade during the afternoon,
late evening or even in the middle of the night if this
suits your lifestyle.
Low Trading Costs
With traditional markets, such as the equity market,
traders will pay not only a spread (the difference
between the price for buying and for selling a stock)
but will also pay a commission to the broker. Even on
small trades this commission can typically be in the
order of $20 and for larger trades can be well over
The very nature of the purely electronic Forex market
means that many of the traditional costs of trading are
eliminated and you are essentially reduced to paying
only the spread. In addition, the highly liquid nature
of the currency exchange market also means that spreads
are often much smaller than those seen in other markets.
The Ability To Trade On High Leverage
In markets which provide the opportunity to trade on
leverage such leverage is typically quite low. In the
case of equity markets for example professional equity
day traders will normally operate on a leverage of ten
times their capital. In the Forex market it is not at
all uncommon to find traders being permitted to trade at
one hundred times their capital.
The only downside to such high leverage is that it
can of course lead to high losses as well as high gains.
However, within the Forex market, risk management is
normally very tightly controlled.
Limited Slippage In Trading
Currency trading provides immediate execution of
trading orders based on real-time prices at which firms
are prepared to buy or sell the quoted currencies. In
almost all cases therefore this means that the price you
see is the price you pay.
This is not always the case in other markets where
there can often be a delay between placing your order
and that order being executed, during which time the
The Ability To Profit Regardless Of Market
While traditional equity markets follow rising and
falling trends (the typical cycle of Bull and Bear
markets) the Forex market does not suffer the structural
bias of such markets.
Currency trading always involves two currencies so
that if you are long on one currency then you are short
on the other. As a result, the potential to profit will
always exist whether the market is rising or falling.