Forex trading is a very exciting activity that requires an individual to have a mix of discipline and analysis. With the right knowledge and ability to read charts or financial reports, there are plenty of opportunities to make a profit on buying and selling currency pairs. Let's take a look at a few reasons why the Forex market is so popular:
Eliminates the middleman
Most individuals using the Forex market have the option to trade directly without the needed to relly on a middleman to broker the transactions. All pricing for the currency pairs is determined by the market responsible which significantly helps to speed up the trading activity.
Forex trading does not rely on brokerage fees, exchange fees or cleaning fees. Most of the brokers involved in the Forex market earn a commission thought the bid / ask spread amount. Under normal trading conditions, the bid / ask spread amount is often less than 0.1%. However, for the high volume traders, this can be lowered to a rate of about 0.07%.
The Forex market is open and available to trade at any time of the day or night. This is certain to appeal to the part-time traders that have limited free time. Whether it is morning, midday, or nighttime, it is possible to place a trade with other active traders elsewhere in the world.
Low entry barriers
Traders in the Forex market have the option to get started with a very small trading account which can be as small as $ 20/25. This is completely different to the futures, options, or stock markets, which require a basic trading account to get started.
A basic micro or mini account is a practical option for the first time trader. While it is more beneficial to have a start-up capital that is more than the bare minimum, the low entry barrier is certain to be appreciated by the average individual that only has a small amount to invest.
Wide open market
The Forex market is at such size and with so many active traders that it is impossible for a single entity to have a major impact or influence on the market prices for a long period of time.
Access to free resources
The majority of the brokers involved in Forex trading offers a variety of free resources to help learn the basics. This can include opening a demo account to build your skills by actually placing the practice trades. Also, there are plenty of charting services and real-time news feeds to stay in touch with the latest information.« Back to Glossary Index