When compared to stock or equity trading, Forex trading has many advantages. Because the stock market is so uncertain right now, many traders are now thinking about trading on the Forex market. Why trade on the Forex market? This was their main question and worry. What does the Forex market have that the stock market doesn't? I'll talk about some of the good things about Forex Trading in this article.
24 Hour Global Market - From Monday to Friday, the Forex market is open 24 hours a day, 7 days a week. Every trading day on the Forex market starts in Sydney, then moves to Tokyo, London, and finally New York. No matter what time of day or night it is, there are always people actively trading on the Forex market. In contrast to the stock market and futures market, forex traders can respond very quickly to changes in currencies or breaking news. The ECNs (Electronic Communication Networks) in the stock and futures markets are fairly new products that were made to extend regular trading hours into the evening. Many of these ECNs have poor liquidity, which means that there is no guarantee that a trade will be made or that it will be made at a fair price. Usually, traders on the stock or futures market would have to wait until the real market opened the next morning to make a fair trade.
Liquidity: The Forex market is the world's biggest and most liquid market. According to a survey done by the Bank for International Settlements (BIS) in April 2007, the average daily trading volume on the Forex market hit an all-time high of US$3.2 Trillion. A rise of 71 percent from April 2004, when US$1.9 Trillion was traded. This rise is mostly because individual investors are using their broker's electronic trading platform. This huge turnover is more than all the stock markets in the world do in a single day. With more trades every day than all of the stock markets put together, this will keep prices stable. With this much liquidity, a Forex trader can easily open or close a position and, most importantly, get a fair price on the market.
You can make money in both up and down markets. In Forex, there is no such thing as a "bull" or "bear" market. In Forex, it doesn't matter if the economy is doing well or if it is going down. When the economy is doing well, most stock traders make money. But we all know that the economy goes through cycles, and that everything that goes up must go down. On the Forex market, this is not the case. No matter how well major economies are doing, currency exchange rates are always changing. This gives traders an opportunity to make money by trading.
Simplicity: The Forex market doesn't have a lot of major currency pairs. So, traders may have a better idea of how and why prices move in patterns. On the other hand, there are thousands of stocks to watch on the stock market, and it's not easy to keep track of all of them.
Small Trading Capital, High Profit Potential: These days, you only need less than $300 to open a trading account. Because there are so many brokers, some may even take much less money. This small amount of trading money could make hundreds of dollars per week on the Forex market. This might not be possible on the stock market. Both markets have the chance to lose money, but traders can make good money on the Forex market with much less trading capital.
Online Forex brokers usually offer high leverage between 100:1 and 100:1. This is a lot more than the usual 2:1 margin that stock brokers offer, which is 15:1 on the futures market. Some brokers even offer higher leverage of 100:1. But it's important to keep in mind that while this type of leverage lets investors make the most money possible, it also lets them lose a lot. Leverage has both pros and cons, so it's important to know how to handle your money. This high level of leverage can lead to big gains, but it can also lead to big losses if the risk is not managed well.
Demo Account: Forex Trading has a unique feature called a "Demo Account" or "simulate account." This "Demo Account" lets the trader trade on the broker's trading platform using real-time prices and the same interface and functions as a real account. With this fake account, Forex traders could learn how to trade on the real market without risking any money.
Forex Trading has its own benefits, so it's no surprise that more and more small investors are joining the Forex market and using brokers' electronic trading platforms, which are easy to find and use.
