Why do people choose to trade forex over other forms of investments? What are the perks that attract most novice traders? High liquidity and trading flexibility are two factors that have contributed to the rise in popularity of Forex trading, which may be done at any time of the day or night.
Leverage
Using leverage implies that you just need to deposit a small initial investment, known as margin, to be able to open a position in foreign exchange trading. It is possible to enter a margin of just 3.3 percent, which is 30:1. Margined trading allows you to keep your entire position in the Forex market while just putting up a percentage of the total value of your trade. Since you can raise profit potential when the market is on your side, and decrease profit potential when the market is against you, this is incredibly efficient.
24-hour-a-day market
A decentralized market, or “over the counter,” is how others refer to Forex trading. In a decentralized market, several technical devices are used to structure the market. Traders can operate a market without a central location by using this method. You may trade currencies throughout the world at any time of day or night using the Forex market.
Other investors who are pressed for time due to their full-time jobs can benefit from this. Investors can also react quickly to currency swings caused by economic, social, or political developments occurring at any time of day or night. There is also 24-hour volatility in the foreign exchange market. Then you can take advantage of a trading opportunity while the tides are in your favor.
High Liquidity
Liquidity in the forex market is defined as: It’s a measure of a market’s activity. A market’s liquidity is determined by the number of active traders and the volume of trading they are involved in.
Known as the biggest traded market in the world, the FX market generates an average daily turnover of $5 trillion. The FX market has a high level of liquidity compared to other financial markets in the globe because of the large number of participants.
No Commissions
Since Forex trading does not charge any commissions such as government or clearing charges, it has become increasingly popular in recent years. “Spread” is a service that retail brokers use to get compensated.
Low Payment Transaction
In a normal market, the bid/ask spread or the transaction cost, is less than 0.1 percent for forex traders. Costs per transaction can be reduced to as little as 0.07 percent for large ones. Take into consideration the amount of leverage you have.
Low Chance of Manipulation
It is impossible for a single person to control the market, especially during peak hours, due to the huge liquidity of the market.
