Benefits of Trading FOREX
There are many benefits and advantages to trading the Forex market as a home based business. Here are just a few
reasons why so many people are choosing to trade in the FOREX market as a home based business, rather than stocks,
options or futures.
Open
24 Hours, 6 Days Per Week
The FOREX Market never sleeps. It is a 24 hour, 6 days a week market. A currency
trader may take advantage of all profitable market conditions at any time. There is
no waiting for an opening bell as in the case of trading stocks. It is a 24-hour,
continuous currency exchange that never closes.
This is very desirable for those who want to trade on a part-time basis, because you
can choose when you want to trade: morning, noon or night. Because of the
overlapping time zones you can actually effectively trade the equivalent of 6 days
per week.
Superior Market Liquidity
With $1.5 trillion changing hands daily, the FOREX market is also extremely liquid. This
means that with a click of a mouse you can instantaneously buy and sell at will.
Whether it's 6pm or 6am, somewhere in the world there are always buyers and
sellers actively trading foreign currencies.
You are never 'stuck' in a trade. You can even set the online trading platform to
automatically close your position at your desired profit level(limit order), and/or
close a trade if a trade is going against you (stop order).
Maximum Leverage
FOREX investors are permitted to trade foreign currencies on a highly leveraged
basis - up to 100 times their investment. Leverage gives the trader the ability to
make extraordinary profits and at the same time keep risk capital to a minimum.
In stocks, for every $1,000 cash you invest, you control a maximum of $2,000 worth
of stocks. The maximum leverage is 2:1. But with FOREX, if you invest $1,000
margin on a foreign currency trade, you can control up to $100,000 in currencies.
Leverage gives the trader the ability to make extraordinary profits and at the same
time keep the risk to capital to a minimum.
Profit Potential in Both Rising and Falling Markets
In FOREX trading you can profit in both rising and falling markets. There is no need
to fear a falling 'bear' market. Trading currency allows traders to earn profits during
rising and falling markets.
One can just as easily "short" a particular currency as go "long", because currencies
trade in "pairs". Thus, when you buy a particular currency, you are actually
simultaneously selling the other currency in that particular pair. As the market
moves, one of the currencies will increase in value versus the other.
Of course, it is up to you to choose the correct one to be long or short. Since
currency trading always involves buying one currency and selling another, there is no
structural bias to the market. This means a trader has an equal potential to profit in
a rising or falling market.
Low Transaction Costs
Active stock and futures traders often see substantial portions of their gross profits
going to broker commissions, exchange fees, and data/chart feeds. In FOREX there
are no brokerage commission fees. In FOREX what you see is what you get, allowing
you to make quick decisions on your trades without having to worry or account for
fees that may affect your profit/loss or slippage.
In the equity markets, you must pay both a commission and exchange fees. The
over-the-counter structure of the FOREX market eliminates exchange and clearing fees,
which in turn lowers transaction costs. Costs are further reduced by the efficiencies
created by a purely electronic marketplace that allows clients to deal directly with the
market maker, eliminating both ticket costs and middlemen.
Because the currency market offers round-the-clock liquidity, you receive tight,
competitive spreads both intra-day and night. Stock traders can be more vulnerable
to liquidity risk and typically receive wider trading spreads, especially during after hours
trading.
|
