While many traders are aware of the benefits of trading on the stock exchange, few new
traders understand the advantages of trading FOREX. This market is gaining in popularity because
it offers many benefits that they don’t get with other markets. Here are a few reasons why
trading FOREX has gained so much favour among traders.
No middlemen. Traders can trade directly with the market instead of relying on a middleman
to make the trades for them.
No fixed lot size. When trading FOREX, traders can participate with $25 or less. Traders
determine their own lot, which makes the market accessible to just about everyone.
24-hour Market. Traders can trade at any time of the day or night, which makes it easy
for part-time traders to decide when they want to trade. The Australian market opens on
Monday mornings and it closes in New York on Friday afternoons.
Low-cost transactions. The transaction cost for trades is usually less than 0.1 percent.
This is the bid-ask spread where brokers make their money. With larger brokerage companies,
the cost per transaction can be as low as 0.07 percent.
Highly liquid. The FOREX market is huge, which means it is also highly liquid. Traders do
not get “stuck” with a trade because there is almost always someone else who is willing
to take what is being offered. In fact, traders are able to set a take profit order so that when they reach the profit level they want, the trade can be closed. They can also set a
stop loss order to close a trade if it’s going the wrong way.
More leverage. Small deposits are able to control larger contract values, which gives
traders the ability to reap significant profits and keep risk capital low.
Free information and practice. Almost all online FOREX brokers provide free demo accounts
to give potential traders practice before trying the real thing. This is a great way for traders
to build their skills and risk fake money before risking real money on the actual FOREX.
