The Forex Trading market has some distinct advantages that makes it very popular among investors:
Liquidity. Forex is the largest financial market in the world, with the equivalent of USD 4 trillion changing hands daily. Such liquidity, especially in the major currency pairs of the foreign exchange markets, helps ensure stable prices and lowest possible spreads (cost of trading). Foreign currency exchange rates can vary from one broker to another, so be sure to choose a regulated reputable fx broker that offers competitive forex spreads. We would advise that before you consider investing in the online forex market to familiarise yourself with the forex trading platform and gain access to professional forex market analysis.
Flexibility. Forex is a 24-hour market – you can trade whenever you want, from anywhere in the world.
Lower transaction costs. Traditionally there are no commissions or charges on Forex, except for the spread. If trading on ECN’s such as Currenex, commission charges do apply.
1:200 Leverage. Leverage is a powerful tool. You need to support a deposit of 500 US dollars to trade $100,000 (1 lot). Such high leverage combined with rapid rate fluctuations can make the Forex market profitable but at the same time risky.
Forex (FX) Margin Trading
Margin trading, enables investors to trade assets with a higher value than the capital held in their accounts. However, this does involve more risk and substantial losses are possible if the market moves against the trader’s position.
Here traders are advised to closely monitor the amount of margin they are using up. That’s because if this exceeds available collateral, positions must be closed, reduced, or covered with an additional deposit of funds.