Why Trade Foreign Currencies?http://instaforex.com/en/index.php?x=ICKU
There are many benefits and advantages to trading Forex. Here are just
a few reasons why
so many people are choosing this market:
• No commissions.
No clearing fees, no exchange fees, no government fees, no brokerage
fees.
Brokers are compensated for their services through something called
the bid-ask
spread.
• No middlemen. Spot currency trading
eliminates the middlemen, and allows you
to trade directly with the market responsible for the pricing on a
particular
currency pair.
• No fixed lot size.
In the futures markets, lot or contract sizes are determined by the
exchanges. A
standard-size contract for silver futures is 5000 ounces. In spot
Forex, you
determine your own lot size. This allows traders to participate with
accounts as
small as $250 (although we explain later why a $250 account is a bad
idea).
• Low transaction costs.
The retail transaction cost (the bid/ask spread) is typically less
than 0.1 percent
under normal market conditions. At larger dealers, the spread could be
as low as
.07 percent. Of course this depends on your leverage and all will be
explained
later.
• A 24-hour market.
There is no waiting for the opening bell - from Sunday evening to
Friday afternoon
EST, the Forex market never sleeps. This is awesome for those who want
to trade
on a part-time basis, because you can choose when you want to
trade--morning,
noon or night.
• No one can corner the market.
The foreign exchange market is so huge and has so many participants
that no
single entity (not even a central bank) can control the market price
for an extended
period of time.
• Leverage.
In Forex trading, a small margin deposit can control a much larger
total contract
value. Leverage gives the trader the ability to make nice profits, and
at the same
time keep risk capital to a minimum. For example, Forex brokers offer
200 to 1
leverage, which means that a $50 dollar margin deposit would enable a
trader to
buy or sell $10,000 worth of currencies. Similarly, with $500 dollars,
one could
trade with $100,000 dollars and so on. But leverage is a double-edged
sword.
Without proper risk management, this high degree of leverage can lead
to large
losses as well as gains.
• High Liquidity.
Because the Forex Market is so enormous, it is also extremely liquid.
This means
that under normal market conditions, with a click of a mouse you can
instantaneously buy and sell at will. You are never "stuck"
in a trade. You can even
set your online trading platform to automatically close your position
at your
desired profit level (a limit order), and/or close a trade if a trade
is going against
you (a stop loss order).
• Free “Demo” Accounts, News, Charts, and
Analysis. Most online Forex brokers
offer 'demo' accounts to practice trading, along with breaking Forex
news and
charting services. All free! These are very valuable resources for “poor”
and SMART
traders who would like to hone their trading skills with 'play' money
before
opening a live trading account and risking real money.
• “Mini” and “Micro” Trading:
You would think that getting started as a currency trader would cost a
ton of
money. The fact is, compared to trading stocks, options or futures, it
doesn't.
Online Forex brokers offer "mini" and “micro” trading
accounts, some with a
minimum account deposit of $300 or less. Now we're not saying you
should open
an account with the bare minimum but it does makes Forex much more
accessible
to the average (poorer) individual who doesn't have a lot of start-up
trading
capital. Open a live account here:
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