Merits of Forex trading

The forex trading is known to be as the biggest market in the world considering its volume of trading around the world exchanges. The merits of the forex can be discussed in detail as follows;

1. Flexibility

Forex exchange market provides the investor with numerous numbers of flexibilities in section of amount of money, regulations, time flexibilities, transparent and time availability. Many exchanges around the world don’t put restriction on the amount of money to be traded. Also, there is less restriction on the regulation of the forex market. The equity and other stock market option won’t provide the option of investing money at weekends or in the nights. Its operation spread over the different time zones.

2. Transparency

The Forex market is not confined to the certain stock exchange. It has been spreading over the different exchanges around the world. Hence the information of exchange is transparent regarding to forex trading; as the central bank of one nation cannot able handle the activity of world forex trading. The volume of the market makes it fair and transparent.

3. Trading Options

Forex markets provide traders with a wide variety of trading options. Traders can trade in hundreds of currency pairs. They also have the choice of entering into spot trade or they could enter into a future agreement. Futures agreements are also available in different sizes and with different maturities to meet the needs of the Forex traders. Therefore, Forex market provides an option for every budget and every investor with a different appetite for risk taking.

4. Transaction Costs

Forex market provides an environment with low transaction costs as compared to other investment options. When compared on a percentage point basis, the transaction costs of trading in Forex are extremely low as compared to trading in other markets. This is primarily because the Forex market is largely operated by dealers who provide a two way quote after reserving a spread for themselves to cover the risks. Pure play brokerage is very low in Forex markets.

5. Leverage

Forex markets provide the most leverage amongst all financial asset markets. The arrangements in the Forex markets provide investors to lever their original investment by as much as 20 to 30 times and trade in the market. This magnifies both profits and gains. Therefore, even though the movements in the Forex market are usually small, traders end up gaining or losing a significant amount of money thanks to leverage.

Author: Editorial staff of 70trades reviews blog 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s