Forex Foreign Exchange Market – Advantages Traders Should Know
So what advantage does the forex foreign exchange market have over other investment vehicles?
When people usually think about different types of investments, the one that comes to most minds is the stock market. Although the stock market is a valuable investment avenue, it miserably fails to compare to the profit opportunities available in the forex market.
The forex foreign exchange market is like no other market. It is open 24 hours a day, whereas the stock market is not. Most other investments also take a large sum of capital for you to make any money from investing. To trade the forex, an investor only needs a small amount of capital due to the leverage that all the forex brokers offer.
Some brokers allow traders to open an account with as little as $250. With this amount a trader can and most reasonably want to invest in a “mini” account. This account size lets the trader buy lots of 10,000 units of currency. When the currency moves in any direction, each point (pip) equals $1. The most common lot size is 100,000 units of currency which is a standard account.
With 2.5 trillion traded globally each day the forex foreign exchange market has very high liquidity.
Most other types of investments are designed to keep your money bundled up for long periods. This can come at a cost to the investor if they need to use the capital. It could be rather difficult to gain access without taking a substantial loss out of their account.
Forex trading also allows the trader to make money when the market is bullish and when the market is bearish. When you invest into the stock market, you need the stock market to gain in price for you to ever take any profits. Like all other investments there are risks involved. But with the great volatility of the forex market, the profit potential far outweighs the risk when followed by a sound forex system.
Forex traders have the opportunity to open up demo accounts and trade with what people call “paper money”. This allows the traders to practice their trading skills in live market conditions without ever risking their own real money. All you do is find a broker that you are interested in and sign up for their demo account.
Then you download their trading station software and you are on your way. This gives the trader valuable experience in the market without ever blowing their own real money. This gives a huge advantage to the learning curve aspect of it. You will also be able to find many forex courses and online seminars that can broaden your knowledge further.
