All You Need to Know About the Advantages of Forex Trading
Forex trading (foreign exchange explained simply) is business and opportunity available in the world market.It is highly lucrative and you can have many benefits in the everyday life of it. But believe me, you can have all the benefits of Forex trading if only and only if you are experienced in it. Otherwise, it might not be your choice of work. But having learned the little nuances of it, you can reap some profits.
Let us discuss here some of the benefits of Forex trading here.
1. Working Hours The first best thing about this trading is that you can work at any time of the day. It is an option that is available 24 hours a day. You can take a weekend break as well, as the market is closed for the weekend days. The working time of the market is from 5 pm on Sundays EST. The trading begins in the US and ends when the major trading market is closed by Friday 5 PM EST.
Why are the working hours advantages of forex trading? If you trade, for example, US stocks, and you live in Asia for example, or in a different time zone, you need to wake up at early in the morning to trade.If you trade Japanese stocks and live in the USA you need to be wake up the whole night etc. You get the point.
So as a forex trader, you can trade EU sessions if you live in Europe, US session if you live in the USA or Asia session if you are in Asia.
2. LiquidityLiquidity is the major benefit of Forex Trading as this is like the capacity of an asset to be able to convert into cash. So when it is said that your trade has high liquidity then it means that you can make huge amounts of cash or you can have large amounts to trade with that particular day.This also will be within the small spreads.
If you are a big trader and you want to buy some stock for 1 million dollars you can not do that for each stock every time.
In the forex market, you have huge liquidity and your trade will be executed in seconds.
I remember when I bought the first stock in my country. I waited 6 days to buy and 28 days to sell. The market didnt have liquidity.
3. Transaction Costs These spreads are an important term in trading as it the difference between the bid amount that you might fix and the amount that the potential selling people might actually offer. This spread will actually be the payment for the people who are involved in this trading. So, the transaction costs generally are not very high.
If I buy 1 lot in forex EURUSD. And the spread is 0.8 pips. BUY 1.3, stop loss 1.29 and target 1.31.
My profit will be 100 pips, and it is $1000. My transaction costs are $8.
4. Be in Control You can actually see that the brokers who are into these Forex trading usually let the sellers and buyers in the market and use a fair amount of leverage. This is the one that gives them the ability to trade with elevated amounts than what they actually possess in their accounts. So, this leverage is the one that actually allows you to control trade with a lesser capital than what you actually have.
5. Get Benefited From Rising and Falling Prices Another advantage of involving yourself in Forex Trading is that you can get benefited when the prices are rising or falling. Both these factors can be suitable for you depending on how you use these. I suppose that you see a currency pair that is going to boost in price then you can buy it or vice-versa. These are the benefits over the stock market and Forex Trading.
Where do I see the importance of forex trading from Rising and Falling Prices?
For example, the stock market can go up 10 years and then start going down. A lot of automated systems are bad in falling markets, a lot of quants overfit systems and in a falling market, they are not so good.
In forex trading, systems are always good and tested at rising and falling trends.
Again, here is a gentle reminder, this Forex Trading is not for the inexperienced traders. You might not profit the same as what others are doing in the same field.
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Risk Warning: Trading leveraged products such as Forex and CFDs may not be suitable for all investors as they carry a high degree of risk to your capital. Trading such products is risky and you may lose all of your invested capital. Before deciding to trade, please ensure that you understand the risks involved, taking into account your investment objectives and level of experience.