There are
many advantages to trading forex compared to investing
with traditional methods such brokering shares (equities)
or futures. Forex benefits include:
Highly trending markets
Because the foreign exchange market gaps are
very limited (the market is closed briefly on
weekends), it's not dramatically affected by buying
programs that allow it to be easily manipulated.
The forex market offers some of the smoothest
trends available in any market. No other market
can come close to the amount of monetary volume
and participation as the forex market, making
it a haven for traders who do not want to deal
with gaps and price movements, erratic spikes
and other choppy market conditions more commonly
experienced in the lower volume markets.
No commissions or hidden fees
Though some speculators are unaware, all financial
markets have a spread (the difference between
the bid and ask price). In traditional futures
markets, you are not only paying the spread, but
you are also paying commission charges, clearing
and exchange fees on top of the spread. We offers
you commission-free* trading on tradable prices
in the forex market. What you see is what you
get, allowing you to make quick decisions on your
forex trades without having to account for fees
that may affect your profit/loss or slippage between
the price you have just seen on the ticker and
the price upon which the order will be filled.
There is no premium for calling in orders, even
if you trade via the phone, use market orders,
stop orders, limit orders or even contingent orders.
In spot currency trading you do not have to worry
about extra charges.
Better leverage (gearing or
lodging your trades)
One of the main advantages for traders trading
spot forex is the margin rate or leverage that
is available. In spot currency trading, customers
receive one low margin rate for trades done 24
hours a day. Margin rates in spot currency trading
vary from around 1 to 5 percent depending on the
size of transactions a particular trader initiates.
Spot currency trading gives customers one rate
all the time, with no hassles and no margin calls,
so traders can manage their own risk efficiently
and simply.
24-hour trading
Since the spot forex market, in a sense, follows
the sun around the globe, it rarely experiences
periods of illiquidity (low volume or widened
spreads). What this means is that any trader in
any time zone can trade spot forex at any time
during the day or night. You no longer have to
wait for the market to open when news has already
hit the streets or have to stop trading because
the CME, CBOT or other futures and trading pits
have closed for the day. This gives the spot forex
trader added flexibility and continuous market
opportunities that are not available in traditional
exchange-traded market products, like regular
futures and stocks trading. You are no longer
limited to trading during the comparatively short
trading days offered by the localized times of
those domestic markets.
Foreign exchange is one of the few true 24-hour
markets. When trading forex, customers enjoy unparalleled
liquidity 24 hours a day. In many futures markets,
however, the overnight access available to traders
is simply window dressing. The lack of liquidity
and restrictions on what types of orders a customer
can place can make trading and protecting positions
a nightmare.
Trading methodology
Trading spot currencies can be done with many
different methods and you will find many types
of traders. From fundamental traders speculating
on mid- to long-term positions based on worldwide
cash flow analysis and fixed income formulas to
the technical trader watching for breakout patterns
in consolidating markets to the Gann fanatic looking
to duplicate the techniques of W.D. Gann, the
methods for trading foreign exchange are many.
Spot currencies are a great market for the trader.
It is where the "big boys" trade and
can provide both large profit potential, as well
as commensurate risk, for the speculator.
No middlemen
Centralized exchanges provide many advantages
to the trader. However, one of the problems with
any centralized exchange is the involvement of
middlemen. Any party located between the trader
and the buyer or seller of the instrument traded
will cost the trader in time or money. Spot currency
trading eliminates the middlemen and allows customers
to interact directly with the market-maker responsible
for the pricing on a particular currency pair.
Forex traders get quicker access and cheaper costs.
Buy/sell programs do not control the
market
In spot currency trading, the liquidity of the
forex trading market makes the likelihood of any
one fund or bank to control a particular currency
very slim. Banks, hedge funds, FCMs, governments,
retail currency conversion houses and large net-worth
individuals are just some of the participants
in the spot currency markets, where the liquidity
is unprecedented. This differs from the stock
markets, which can be very susceptible to the
buying and selling habits of large funds.
Trade off of your profits
Ever been up on a stock and wished you could
leverage that profit and get in a little more
of the issue? In spot currency trading, you can.
Use your open profits to add to your positions.
As you gain experience, experiment with pyramid
trading strategies. The options are endless because
the market is cutting edge.
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