Benefits of Trading Forex

Here are the best benefits you can get from forex trading:

  • It’s a 24 Hour market For Five Days

The forex market is worldwide, so trading is pretty much continuous as long as there’s a market open somewhere in the world. Trading hours start in the U.S. when the first major market opens, in Sydney, Australia, at 5 p.m. Eastern time on Sunday. Trading ends for the week when the last major market, in New York, closes on Friday at 5 p.m.

  • Flexibility

Forex exchange markets provide traders with a lot of flexibility. This is because there is no restriction on the amount of money that can be used for trading. Also, there is almost no regulation of the markets. This combined with the fact that the market operates on a 24 by 7 basis creates a very flexible scenario for traders. People with regular jobs can also indulge in Forex trading on the weekends or in the nights.

  • There’s High Liquidity

Liquidity is the ability of an asset to be quickly converted into cash. In the world of forex, the high liquidity means large amounts of money can be moved into and out of currencies with generally small spreads — the differences between the bid prices for potential buyers and the ask prices for potential sellers.

  • Transaction Costs Are Low

The cost of a transaction is typically built into the price in the forex market in the form of the spread. Forex brokers pocket the spread as their payment for facilitating the trade.

Spreads are measured in pips. For most currencies, a pip is the fourth place after the decimal point or 1/100 of a percent.

In a forex trade, if the bid price was 1.3244 and the asking price was 1.3246, the spread for the transaction was 2 pips.

  • You Can Use Leverage

Forex brokers often allow traders to buy and sell in the market using significant amounts of leverage, which gives them the ability to trade with higher amounts of money than what is actually in their accounts. If you were to trade at 50:1 leverage, for instance, you could trade $50 for every $1 that was in your account. That means you could control a trade of $50,000 using only $1,000 of capital.

  • There’s Profit Potential from Rising and Falling Prices

The forex market has no restrictions on directional trading. This means that if you think a currency pair is going to increase in value, you can buy it (or go long), and if you think it is going to decrease in value, you can sell it (or go short).

Because currencies trade in pairs, you’re always actually buying one currency and selling the other no matter whether you’re going long or short. Let’s say you’re trading the British pound/U.S. dollar (GBP/USD) currency pair. You would buy that pair—that is, buy the pound and sell the dollar—if you expected the value of the first currency, known as the base currency, to increase in value in comparison with the second currency, known as the quote currency.

These are some of the benefits who reading out forex history.

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