Benefits of Joining the Forex Market
Today, the foreign exchange market is the biggest and the busiest market in the world. It offers great prospects to traders, allowing them to earn cash in a short span of time. Of course, Forex trading is not all about sunshine and rainbows. So, you should have an understanding of the market before making any hasty decisions.
Similar to making any other investment, you should spend some time on research and analysis. Many people join one of the Forex brokers to learn the ins and out of forex trading. So, here are the major benefits of finding the Forex broker for anyone who wants to make some profit.
Benefits of using the Forex broker
- Low commissions or no commissions at all
Forex brokers often offer no clearing, exchange, government, and brokerage commissions. Most of them are compensated for their services through spreads. Thus, don't hesitate to refer to Avatrade, HotForex, FxPro, IC markets, easyMarkets, Forex.com, FXTM, Binary.com, or Pepperstone. All of them have low spreads with the lowest or no commission fees at all.
- Flexible lot size
In most cases, lot or contract sizes are determined by the exchanges. For instance, an average contract for silver futures is estimated at 5,000 ounces. In spot forex, you can determine the size of your lot or contract size on your own. That way, you can start trading with accounts as small as $25.
- Low transaction costs
The retail transaction cost is usually less than 0.1% under normal market terms. For bigger transactions, the spread can be as low as 0.07%. Of course, this indicator is related to your leverage.
- 24/7 market availability
The Forex market never sleeps. This is an excellent feature for those who want to trade on a part-time basis because they can choose the most suitable time for trading.
- Lack of market control
The Forex market is considerably liquid so that manipulation by any single entity is hardly possible during active trading hours. This is especially the case for the major currencies. Due to the size of the foreign exchange market, it cannot be fully controlled in terms of the market price.
A small deposit can control a much higher contract value. Leverage provides the trader with the ability to earn money. At the same time, it manages to keep risk capital at the minimum level. For instance, a Forex broker may provide 100-to-1 leverage, meaning that a $100 dollar margin deposit will make a trader buy or sell $5,000 worth of currencies. Meanwhile, with $1000 dollars, a trader can trade with $50,000 dollars and so on. Thus, you shouldn't forget that leverage is considered to be a double-edged sword. Without proper risk management, a high degree of leverage can result in considerable losses as well as earnings.
- High Liquidity
The forex market is enormous, which makes it extremely liquid. This is a serious benefit. Under normal market terms and conditions, you can instantaneously buy and sell assets because there always will be someone willing to take the other side of your trade. Once the desired level of success has been reached, you will be able to set your online trading platform to automatically change your position.
- No obstacles to entry
Starting your journey as a currency trader does not necessarily cost you a fortune. When compared to trading stocks, options, or futures, it really doesn't. Why? Thanks to “mini” and “micro” trading accounts offered by the majority of Forex brokers, you can proceed with trading activities while having $25 on your account.
It doesn't mean that you should open an account with the bare minimum. The point is that even an average person can try his/her luck in Forex trading thanks to its accessibility and affordability.
- Availability of demo accounts
Most online forex brokers offer the so-called practice accounts to practice trading and develop your skills, along with the most recent forex news and charting services. Nicely, you don't have to pay a thing to open such an account. It is totally free! Demo accounts turn out to be valuable resources for those who don't have a lot of funds to put them under a huge risk. By challenging your trading skills with “play money,” you will get ready for creating a real trading account and risking real money.
The bottom line
If you wish to join the world of forex trading, you should act cautiously. Many traders lose plenty of money regularly as a result of someone's fraud schemes and their own incautiousness. The Forex trading market may seem like the best option for you, but there are a lot of rules and regulations you should stick to.
Each broker follows his/her own quoting method based on individual preferences and needs. Thus, before making any decision, you should conduct a small investigation to make sure you are doing the right thing.