Advantages of Forex Market Trading:
Forex with its daily volumes surpassing over 4 Trillion USD daily, is the largest market in the world. This implies that there is a high density of liquidity which makes it easier for investors to easily switch trading positions. It also allows investors to trade at any given time as unlike the structured and regularized stock exchange, there is no opening bell or closing bell in the Forex market. You can enter and exit a trade at any time you want except holidays. There is also ease of access to fund your trading account with little or large amounts of cash. Retail brokers can also begin trading and execute to trade with the click of a mouse. There is also a freedom to trade anywhere in the market be it in equities or securities, the only requirements needed to trade is constant internet connection and a laptop device. Forex trading sometimes comes with commission free transactions and lower transaction fees than commodities and stocks.
Before beginners can start to trade in the Forex market, it is advised, they study the potential risks and rewards as asides, it is one of the easiest ways of losing your money as there is a high risk of volatility and high probability of losing your trading money. Before starting, it is critical that you are informed of this.
Forex trading is different from the stock trading done on the stock exchange and regulated by the securities and exchange commission. In Forex trading, currencies are traded in pairs and prices are listed in pairs. FX market prices always fluctuate and isn’t constant, but this makes it hard for potential investors to make profit on small and little trades. This is the major reason behind the leverage or funds borrowed by brokers, they are used to mitigate against losses and risks of losing all your trading money.
In Forex trading, the sell and buy prices are important to a currency listing. They represent the brokers/dealer’s position. The bid price is the rate at which you can give out the base currency- meaning the price at which you are ready to sell the currency. The ask price is the amount by which the dealer is willing to pay to purchase the currency.