Before a trader decides to start trading forex and learn how to trade, it cannot be wrong to find out about the benefits of trading. An overview of the advantages helps you to whether it makes sense for you to learn forex or not.
Trade rising or falling markets
Unlike stocks, where falling prices have a significant disadvantage, this is not the case with forex trading. You can bet on both falling and rising prices. This can be easily explained using an example. If the trader has US Dollars and finds that the rate is falling, he sells the US Dollars and takes a short position. At the same time, the money is invested in a strong currency, and a long position is built up. There is a predictable risk unlike the stock market.
Trading is always possible.
When trading on the stock exchange, there are exchange times to consider. Especially traders who are not trading working full-time may have problems here. One of the advantages of forex trading is that you can trade almost around the clock. It is also important to note that certain currency pairs are traded a lot at certain times. This depends on the trading hours of the respective trading venues. For example, if you bet on dollars and yen, you should look for opportunity in the Japanese session.
Liquid market for the traders
Every day, the forex market makes an average turnover of around $6.6 trillion. It is one of the most liquid markets in the world. The advantage of this is that there is always someone to buy or sell. Manipulations are almost impossible to find.
Important point: There are no particular advantages here because the forex market is influenced by the banks’ interest rate decisions, and these can be viewed at any time. Thanks to the high volume, the costs for trading are low, the spreads remain clear.
In forex trading, you can trade with significantly more money than available. Depending on the leverage, it may be that the trader deposits $500, but he can trade with $5,000. It is important to know that if the trades fall below the margin, then you have to deposit again to keep holding the positions. Otherwise, the positions will be closed. For the trader, this would result in a high loss. Generally speaking, trading in the margin is more for experienced traders.
Low and clear fees
As already mentioned, the cost of forex trading is very low, which also increases profits. There are usually no fees at all. The brokers live on the Forex spread that has to be paid. The customer is the market user and trades at the prices that are offered.
One of the advantages of forex for beginners is that traders don’t worry too much about having to make various approaches. It is sufficient to open an account with a broker. Trading can begin worldwide.
Forex is really a straightforward business to start and it has several advantages. However, it is recommended to acquire trading skills and try the demo account first. Then you will be able to start off with real funds.