Forex Trading: Great Advantages since 1971
Table Of Contents
- How does it function
- About benefits of Forex trading in few words
The Foreign Exchange Market that you probably know as Forex is a market where currencies are available for buying and sale. This worldwide market handles huge exchanges (about $1.5 trillion daily). Forex exists since 1971, when currencies became valued. The floating rates gave new opportunities for Forex traders.
How does it function
The currencies are always trade in pairs and every transaction means selling one currency and buying another one. If the investor believes one of the pair will grow up, he buys it and sells later high-priced. The rate of currencies always changes, that’s why Forex traders has almost unlimited potential for profit. Using special Forex strategies broker and investor can minimize their risks and feel free to increase their profit.
Instead of other investments, Forex has few advantages that make it the most popular market for investors all over the world.
- The market place is free. A daily volume of global Forex trading contains $1.4 trillion. Oodles of people trade Forex in every country around a globe.
- The commissions and exchange fees are abolished. Instead of trading in futures, Forex doesn’t require any commissions or other fees. Even though there are no commissions, the spread is usually larger than during trading futures.
- Low margin. The Forex margin requirements are about 1% instead of 5% for trading futures. Trading on margin may become the profitable way to create an investment Forex strategy, but you should understand the risks involved.
- The risk is limited and the stops are guaranteed. Trading futures means unlimited risk level. The Forex trading system is more safe and predictable.
- 24-hour Marketplace. Trading the futures is possible only during few hours a day. Besides, you have no ability to get out of the market until it opens. On other hand, Forex brokers are able to trade at any time.
- Rollover of Positions. Every two days Forex positions expire, so Forex traders need to rollover each trade.
About benefits of Forex trading in few words
Forex options give the traders great opportunities, here are some of the benefits they get:
- It is closed only on the weekends;
- Transaction costs are very low;
- Low risk and protection for investors;
- A bull or a bear markets are available;
- The Forex trading system is very efficient and liquid.