The Forex market is considered to be the most liquid market in the whole world. It is far more profitable than other options like trading futures and stocks. A while back the latter were considered to be safer, thanks to the restrictions imposed on the trading services offered by financial institutions and banks. However, now a career in Forex currency trading seems to be looking up as there are opportunities being offered to even small investors in Forex trading. Having said that, let’s look at some of the advantages you get with Forex trading.
No Limit up / limit down
When it comes to the Futures market, there is a limitation to the number of transactions and the type of transactions that can be made by a trader. If a currency shows a rise or fall that’s beyond a pre-determined daily limit, traders are not allowed to opt for new positions. All that they can do is to liquidate their current position if they choose.
When it comes to Forex currency trading, such trading constraints do not exist. A trader is free to implement any trading strategy. This helps him to protect his financial investment from the effects of unforeseen price fluctuations by issuing stop loss orders. 코인마진거래
24 Hour Forex Trading
The Forex market stays open 24 hours. It starts up in Asia at around 24:00 CET on Sunday evening and closes on Friday around 23:00 CET in the US. It is true that there are electronic communication networks or ECNs that supply after hours trading for the futures market and stock market. However, in Forex currency trading the liquidity is very high and extremely competitive prices are offered. This makes it more exciting and a better money-making enterprise.
Bid/Ask Spread rates
Spread rates in Forex currency trading have seen a phenomenal tightening up in these last few years. On EURUSD (which happens to be one of the most liquid and widely traded pair in currencies), most online Forex brokers are willing to give a spread of about 1.8 – 3 pips. This is equivalent to almost 0.014% and 0.023% on the underlying value of the dollar. This is not possible in stock trading, where you see only stocks that are liquid providing tight spreads. It is predicted that in the future, market spreads will vary greatly swinging to anything between 5 to 9 pips.
Sell Before You Buy
When it comes to equity broking, you have to face highly restrictive margin requirements for short selling. What that means is that a customer will not have the liquidity required in order to sell stock prior to buying it. However, in the spot market, it is slightly different. When you are selling one currency, you have to buy another one necessarily. In Forex currency trading, a trader will hold the same capacity irrespective of whether he is buying position or initiating a selling. That’s another reason why Forex trading has more appeal for traders and brokers.