Advantages of trading Forex

Forex trading involves buying and selling different currencies. It works on the theory that it is similar with the stock market. As we know, to make profit, you need to buy at a lower price and sell at a higher price, or we can also sell at a higher price first and buy at a lower price. But it is not as easy as it seems. By studying certain market conditions, you can actually make a profit in forex. All you have to do is analyze the forex correctly and make the right trade.

Why opt for forex trading? There is also the option of investing in the stock market, but here are some important advantages of trading forex over the stock market.

24 hour trading

Forex trading is done 24 hours a day. This market is open throughout the day and night as somewhere in the world, there must be this buy and sell trade going on. The traders involved in the forex trading strategy can always get that information first hand and can act accordingly. The exchange rate is executed via telecommunications throughout the bank network 24 hours a day from 00:00 GMT on Monday to 22:00 GMT on Friday. There are ECNs (Electronic Communication Networks) that bring buyers and sellers together.

Greater Liquidity

There is superior liquidity in the market as there are always buyers and sellers to buy and sell currencies. The size of the Forex trading market is 50 times larger than the New York Stock Exchange, and the liquidity of such a large market ensures price stability. Forex trading stop orders could be carried out more simply. This makes the Forex trading signal more liquid and allows Forex traders to take advantage of trading opportunities as they occur instead of waiting for the market to open the next day.

100:1 high leverage in forex trading

Leverage of 100 to 1 is commonly available from online forex dealers, substantially exceeding the common 2:1 spread offered by stock brokers. This gives them great leverage in their trades and presents the potential for extraordinary profits with relatively small investments. Leverage can also go the other way and can lead to huge losses if care is not taken.

Forex trading transactions have no commissions. Forex brokers can make money by fixing their own speculation between what price a currency can be bought and what it can be sold for. Instead, Forex traders have to pay a commission or brokerage fee for every future transaction that comes into view. The foreign exchange market is so large that no individual, bank, fund or government agency can influence it for a long period of time. In the forex trading strategy, you can trade between seven currencies, but not everyone trades in all of them.

There are certain trading signals that give directions for trading. These forex signals are delivered via email, instant messaging or directly to your desktop. Some services even offer auto trading, allowing you to automatically execute your trading signals directly into your broker account.