Forex Markets as we all know are now the leading financial markets. The advantages and benefits associated with forex trading are immense of which a few have been discussed below so that people know why they should start this as their business activity.
1. LEVERAGE:
The most important thing you need to know under Forex trading that a small amount of deposit would allow you to have control over a large total contract value. This means that having the leverage, it would allow you to make extraordinary profits and at the same time keep risk capital to minimum. For instance if a firm offers you 2000:1 leverage, this means that a $50 margin deposit would enable you to buy or sell currencies worth $10,000. The higher the deport margin, the higher will be the leverage allowing you to buy and sell more.
2. LIQUIDITY:
Another benefit of forex market is its liquidity unlike the stock market. The forex market is so large in size which makes is extremly liquid. This means with just a click of a mouse, you can buy and sell currencies at well, which makes you free from getting stuck in a trade. Everything will be done at your willa nd you can even set the online trading platform to automatically close your postion at the profit level you wish to or close the trade if the trade is going against you.
3. PROFIT IN BOTH ‘RISING’ AND ‘FALLING’ MARKETS:
As mentioned above, stock market and forex market have major difference and one of this could be, making profit even while the currency is going down. This is not true for the stock market as there you have to wait for the share price to rise so tha tyou could make good money. However, under the forex market you could make handsome amount of money even if the currency pair is going up or down. This is true as the trader can make profit by taking a long position which means that you buy a currency pair and later sell it at higher rates or by taking a short position which means selling the currency pair and buying it later at a lower price. An example of this could that if you the think the US Dollar will rise in value against the British Pound then you will buy more Pounds, this is going long, and if you think that the US dollar is going to lose in value against the British Pound then you will sell Dollar and buy Pounds which means going short.
4. WORKS 24 HRS:
This market is very flexible because it works 24 hours and never sleeps. It opens from sunday evening and goes onto working till Friday afternoon Eastern Standard Time. This means that if you are person who likes flexibilty then this might be the right option for you depending when you want to work, morning, evening or night.
5. FREE ‘DEMO’ ACCOUNTS, NEWS, CHARTS AND ANALYSIS:
If you are new to the forex market then most of the companies which operate online which a majority of them do then they offer free demo’s for your benefit of how accounts need to be traded. Further more they keep you updated with the breaking news and charting services. This would be very helpful for those traders who would like to polish their trading skills with virtual money before opening a live trading account.
6. ‘MINI’ TRADING:
If you think that you need large sums of money to get started then that’s not true. Most of the online Forex firms now offer you mini trading accounts which require a minimum deposit of only $200 to $500 with no commission trading. This makes forex markets the most accessible markets for traders with no large initial amount required.
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