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Benefits of Trading Forex

By Edited Nov 13, 2013 0 0

Forex Trading has several advantages over other trades like dealing in commodities or stocks. It gives you the desired flexibility ease compared with other professions. Today with the help on modern technology, new avenues have been established where virtual trading platform exist which not only help in teaching a newbie but also provide a great opportunity to the expert traders to test their skills in a high flowing market.

Following are a few of advantages:

24 HRS ACCESS


One of the major advantages of trading Forex is the opportunity to trade 24 hours a day. This gives you a unique opportunity to react instantly to breaking news that is affecting the markets. If we consider physical trading, some of the European markets remain closed on Saturday and Sundays. Similarly, some of the Asian markets like Dubai etc. remain closed on Fridays. However, the online virtual trading platforms mostly remain alive 24 hrs a day and seven days a weak.

READY MARKET AVAILABILITY

In the Forex market, there are always buyers and sellers available to trade. Therefore, you do not need to wait for customers or suppliers. Your entry and exit is very easy and fast. Further, the spreads are very narrow giving you the desired flexibility. Simultaneous availability of countless buyers and sellers also ensures the transparent play of the market forces where you can test your skills.

NO OR MINIMUM COMMISSIONS

The fact that Forex is often traded without commissions or with minimum commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis. The trade facilitators actually earn small amount of commission on large number of transactions. The higher the volume is the higher will be the margin of broker.

TRADING ON THE BASIS OF LEVERAGE


Leverage enables you to hold a position worth up to many times more than your actual margin deposit. The margin or deposit is actually the maximum cushion money that you can loose. For example, in deal of 100,000 USD, you suffer a loss of 1,000 USD due to unfavorable trend in rate. Therefore, it means that you only need to have a deposit of USD 1,000 through which you can actually deal 100,000 USD.

EARN PROFIT EVEN IN FALLING MARKETS

Since the market is constantly moving, there are always trading opportunities, whether a currency is moving upwards or downwards in relation to another currency. If the EURUSD declines, for example, it is because the US dollar gets stronger against the euro and vice versa. So, if you think the EURUSD will decline (that is, that the euro will weaken versus the dollar), you would sell EUR now and then later you buy euro back at a lower price. In case that the EURUSD indeed declines, then you can take your profit. The opposite trading scenario would occur if the EURUSD appreciates.


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