Forex is a term that means foreign exchange trading or trading in international currencies. Forex trading offers many benefits, that’s why the Forex trading market has continued to grow in popularity. It is an international market that is incredibly liquid and has a huge daily trading volume. Forex trading offers investors many unique advantages once they have a good understanding of how the Forex market works and have done their research and created an effective trading strategy. There are 15 independent Forex exchange markets worldwide. The four major Forex markets are London, New York, Singapore, and Tokyo.
A 24-Hour Market
Many investors like Forex trading because it takes place 24 hours a day. The Forex market is global. That means savvy investors can make trades in the Forex market continuously because there is almost always a market that is open in some part of the world. The trading begins when the Australian markets open on Sunday evening, and it continues unabated all week until after the New York markets close on Friday. The best time to do Fore trading is when several markets are open. This increases trading volume and the potential for making a profit. Between 8 am and noon when both the London and New York exchanges are open is the best trading time.
The Forex market offers high liquidity. That means it is easy for an asset to be quickly converted into cash without any price discount. For investors in the Forex market that means it is possible to move a very large amount of money both into and out of different foreign currencies with just a minimal movement in price. This provides a lot more freedom and the opportunities for profit taking. This can make investors very happy.
Low Transaction Costs
Another reason investors like Forex trading is because the transaction costs are very low. Plus, the cost of each transaction is usually automatically built into the price of each Forex transaction. It becomes part of what is called the spread. In Forex trading, the difference between the buying price of an asset and its selling price is called the spread. The low transaction costs mean Forex traders can keep more of their money in their trading account.
The Ability to Trade Using Leverage
Forex brokers let traders make Forex market trades using leverage. Leverage is the ability to make trades using more money than you actually have in your trading account. That means should you decide you are going to make a trade at 50:1 leverage, it’s possible for you to trade $50 on the Forex market for every $1 you actually have in your account. Using leverage, an investor can control a trade valued at $50,000 and only use $1,000 in the capital.
Investors Can Potentially Profit Whether Prices Are Rising or Falling
In the Forex market, there are no restrictions on directional trading. Therefore, if an investor thinks that a currency pair will increase in value, they can purchase it or go long. On the other hand, should an investor believe that a currency will decrease in value, they can sell it or decide to go short? This system allows traders to profit from both rising and falling currency prices.
Brokers like TradeGBP and FXTrade777 can help people to set up a Forex trading account and give them the opportunity to become involved in the lucrative Forex trading market. New traders are entering the Forex market every month because of the excellent potential to make money and all the other benefits it offers. Forex trading is a great way to generate income.