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Advantages of Trading Forex


Why is Forex better than most of the abundant investment opportunities available? The reasons are many, but here we have compiled a few.

For starters, the market for the exchange of foreign currency is the fastest developing one. This results from the fact the Forex market has a comparative advantage in many aspects: it is the most liquid market, it is open 24 hours on workdays, it has low commissions, leverage allows trading with greater volumes than one normally has access to, there is a wide variety of deals that can be made, there are millions of other practitioners who form an active community, and so on.

The daily turnover on the Forex market is over 5 trillion dollars, dwarfing in comparison any stock exchange in the world. Because of the abundant liquidity on the market, traders are able to open many kinds of deals of various volumes. By liquidity we mean the money available on the market; and there is plenty of that because, as mentioned above, the market is open 24 hours per day, ensuring that there are always traders active in some part of the world, making buy/sell deals possible. Another benefit attributed to this liquidity is that changes in Forex trading are not as sudden as they are on the stock market. Being open 24 hours a day also means that traders can react almost immediately - you can see news on your social network feed and already be working on a new deal in the next moment. Furthermore, the lack of commission fees is quite appealing to traders - the only expense they need to make is the spread (the difference between buy and sell prices). And thanks to leverage and margin trading, the capital required to open a new deal is just a fraction of the real money behind it. This is great news for those reluctant to invest great funds into their trading career.

A major difference between the stock exchange and the Forex market lies in the human factor. While it is true that people affect forex deals - what other traders feel like and the type of operations they make are reflected in the market, it is far more predictable than it is on Wall Street. Stocks can change values overnight due to internal company struggles, scandals and political changes much more suddenly than currencies do. For this reason a well-informed trader who knows the methods of technical analysis has better chances to success in Forex trading than on the stock market.

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