What are the key advantages of the Forex market?
- Superior Liquidity: Liquidity is what really makes the foreign exchange market (or Forex) stand out from other markets. There are over 15 foreign exchange markets, which are by far the most liquid financial markets, dealing about one trillion U.S. dollars on a daily basis. This ensures better trade execution and allows traders to easily open and close a transaction. The superior liquidity also makes it possible to focus on only a few instruments as principal investments.
- 24-hour Market: One of the biggest advantages of Forex market transactions is that they are decentralized. The Forex market operates in financial centers across the globe, starting a trading day in Australia and following the sun through Hong Kong, Frankfurt, London and ending in New York.
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Leverage: With the help of leverage Forex market trading provides much greater purchasing power than many other markets.
For example, a trader uses 1:100 leverage, which means that only a deposit of 1,000 USD is required to open a 100,000 USD trade. - Low Transaction Costs: These costs vary from broker to broker, but they are usually relatively low . The most common costs associated with trading are the spread and commission fees charged by the broker for each trade.
- Low Minimum Investment: Forex requires less capital to start trading than any other financial market. You can start well with up to 300 USD as a low initial investment, depending on the leverage provided by the broker. This is a great advantage, allowing to keep the investors’ own capital to the lowest level.
- Trade online: If you travel a lot, you can trade online from anywhere in the world.