One of the benefits of Forex trading is that the small investor has opportunities that may not be available in other markets, or other forms of investment…
Forex trading is one of the few businesses where a trader can realise a large fortune starting with a small initial investment.
This is because Forex trading is highly leveraged, so a small margin can control a large position.
If you don’t understand leverage, don’t worry, I’ll explain this term on other blog posts…
In the meantime be happy enough to know that you, as a Forex trader, have the ability to make nice profits, and at the same time keep capital risk to a minimum!
Liquidity is an elegant word to define the money involved in a particular market. The foreign exchange market is the largest financial market in the world.
Compared to the $74 billion a day volume of the New York Stock Exchange, the foreign exchange market looks absolutely enormous with its $4 TRILLION a day trade volume.
The currency market is in fact over 53 times BIGGER than the New York Stock Exchange!
This means that with a click of a mouse you can instantaneously buy and sell at will as there will usually be someone in the market willing to take the other side of your trade. You are never “stuck” in a trade.
In an illiquid market, such as low turnover shares, taking or exiting a position may induce changes in market prices. In addition, a counterparty (another buyer or seller) may not be available to allow you to transact.
Gigantic liquidity also means that no single entity can control or corner the market for an extended period of time.
All in all, the Forex market is a 100% pure market.
Perfect market for our strategy, perfect market to trade with our secret chart patterns, perfect market to make money…
Low start-up cost
Start-up cost is low when compared with day trading stock or futures.
In fact, you can trade from anywhere in the world as long as you have an Internet connection.
Online Forex brokers offer “mini” and “micro” trading accounts, some with a minimum account deposit of $25, which is small capital to start with but also a clear signal on how good this market is for small investors.
You can also start trading on DEMO for free. A lot of brokers offer free platform with real simulation of the market. This is an amazing tool for absolute beginners!
No clearing fees, no exchange fees, no government fees, no brokerage fees.
Most retail brokers are compensated for their services through something called the bid-ask spread (more information about the spread in the coming videos).
24 hours Currency Trading
One of the benefits of currency trading is that the market is very liquid 24 hours a day. No other financial market even comes close to this.
This is awesome for those who want to trade on a part-time basis, because you can choose when you want to trade: morning, noon, afternoon, during the night, or whenever you want!
No fixed lot size
In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5,000 ounces.
In the Forex market, you have the freedom to determine your own lot, or position size (i.e. the amount you want to trade).
Long or short? No problem!
In the Forex market there’s no limitation in making profit, buying OR selling currencies.
Traders are completely free to make speculation in both directions, making money when the market goes either up or down.
Trading at Home
One HUGE advantage of Forex trading is the opportunity to work at home and spend more time with your family.
All you need is a good Internet connection and a PC.
You can therefore make your own timetable and have much more free time to enjoy your life!
Now that you have a better understanding of the advantage of Forex trading compared to other markets, the next post will explain to you, in detail, how it is possible to make money trading Forex…