Why should you trade forex?

Forex trading is one of the most convient investment by nature and most exciting when it comes to its nature of reward.

It’s fun and enjoyable watching your account grow every minute, hour and day. What a joy it gives when you have accumulated lots of money at your convenience and watching your dream come true. Trading forex is the best way to multiply your income without having to use a lot of physical strength. On the other hand I may  say it’s not easy to do, but when you have mastered it’s tools and tactics, it becomes interesting. Let’s take a look at some of the reasons why one should consider trading forex.

Accessibility:

 Forex is very accessible and can be done by any one regardless of qualification. With forex trading, you can even start trading with a relatively small amount of capital as low as $100, for small size traders.

As we said it’s an over the counter trade which is done electronically, you do not need an office to sit in to start trading, you can even do it on top of a mountain or in your house , at your own convenience.

Forex is convenient to all traders:

Forex is the most highly liquid market in the world, because there is constant supply and demand for money, the markets are open 24/5, therefore you don’t have to adjust your time for other things to catch up with market opening hours as you can trade all day and night with ease. More to that different currencies are more active at different times throught the day, so whenever you have time, there is something you can take advantage of to make money.

Leverage:

 Here a trader can buy or sell to large amounts more than he /she actually has without having a large capital at his/her disposal. This way one can generate more substantial gains.  High leverage allows a trader with significant investments to trade high volumes of currencies and thus have a potential to make significant profits from the small moves in the market. But as a trader you should always bare this in mind that leverage is a two sided sword that can also swallow up your small account when not used appropriately.

No Commissions:

You never have to pay sales commissions when you trade currencies. Stock brokers charge you a commission for every trade you place to get into position and out. In a currency market, commission does not exist. You simply pay the difference between the bid and the ask prices (spread).

The forex expenses are summed up in the  currency spreads and the size of the spread depends on the broker you are using and the kind of currency pair you are trading. So you have an option of minimizing your costs by choosing to trade currency pairs with small spreads.

Highly liquid.

Forex market has the largest number of participants which makes it highly liquid due to the constant demand and supply for money. There are low price fluctuations, which makes it convenient even for traders to place large orders because prices are less volatile

Low trading costs.

 Forex accounts trade with little or no commissions, there are no exchange fees or data licenses. The cost of trading  is the spread between the buy price and the sell price which can be reduced by choosing a pair with a small spread. More so, the stiff competition  between brokers and great number of market participants has led to low entry and transaction costs compared to other financial instruments.

The costs incurred apart from spreads are the internet cost and the trading gadgets such as a computer or a laptop or a mobile phone .

24/5 trading

 Unlike stocks, bonds and options, forex markets are open around the clock from Monday to Friday 24 hrs a day, the markets are open day and night so you trade whenever you like at any time of your convenience.

Forex vs. Stocks

Looking at this picture, in terms of liquidity and volume, Stocks stand NO chance against forex

Liquidity and trading volumes.

The forex market is the most liquid with a currency market trading average of 5.3 trillion per day in the whole world. This figure exceeds by far the combined volume of all the stock markets.

Low transaction costs

 Trading forex is less costly compared to stocks. When doing forex, you avoid a number of hidden fees that are usually associated with stock markets.Forex brokers  earn their fees for trades placed as a result of bids and spreads.

 There are few currency pairs to focus on when trading forex than in stocks where you have to analyse a lot stocks which may confuse you leading to making wrong choices.

High leverage

Forex trading provides an option for margins where a trader can execute big size trades by borrowing money from the broker(leverage)  to increase his or her investment unlike in stocks where there is no such option.

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