Benefits of Forex and Currency Trading
The foreign exchange market is really big in terms of liquidity, accessibility and nature. It is possible to purchase and sell any currency over the counter. There is no physical exchange required in the forex market, unlike in many other markets. Besides, there are several forex trading benefits. Let’s take a look at them.
1. It is truly a global market
When it comes to the forex market, it is very expansive and has traders who participate from across the globe. More than $4 trillion is exchanged daily on an average. The sheer size of the market gives huge benefits to traders.
2. Ideal for beginners
If you are a first-time trader planning to make small investments and learn about the market, forex is a great choice. One of the top advantages of the exchange is that the brokers give you a chance to use demo accounts. Through them, you can test the waters before you make a commitment to a deal.
3. Works all day for five days
The forex market is global, which means trading takes place at any hour. The market will always be open in some parts of the world and you can trade whenever you want to. It operates 24 hours a day and five days a week. The first market will open on Sunday at 5 pm in Sydney, Australia and the trading will end on Friday, 5 pm in New York.
The brokers allow you to borrow against a small investment, thereby, giving you a chance to open a high position. There is a ratio that will show the money you can raise from leverage.
5. Higher liquidity
Forex and currency trading happens all day for five days and the forex market is considered to be the most liquid market globally. This makes it easier for retail investors to buy the assets and sell them with a low effect on their value. Liquidity also ensures minimal risk.
6. Directional trading
There are no restrictions with respect to directional trading in the market, unlike the stock market. Traders are constantly purchasing or selling a currency as per the market movement. So, you can conveniently sell short or go long based on your prediction of how the value will change. Due to the liquidity in currencies, the brokers do not apply high transaction fees that are usually applicable in the stock market.
7. It is a free market
With several participants in the market, there is no single-player or no one controlling it. It is a free market and external factors like the economy controls the prices. It shows the prominence of the exchange as an ideal investment option as there are no middlemen who exist. There are only brokers who help connect the buyers with the sellers.
8. Low charges
You can start forex trading with a small amount without having to worry about the major cost of transactions. The transaction cost includes the fees of the broker, and they are usually not very high.
There are several software and applications you can use to invest in forex.
Above-mentioned factors are some of the main benefits of currency trading and forex which makes it more dynamic than other markets. If you have the experience and skills, investing in foreign exchange can help generate high returns.
ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.