Is Forex Trading For You?

Is Forex Trading For You? In Forex trading you will find that it offers several advantages over stocks and shares. Lets us take a look and make comparison between these 2 financial instruments; A substantial attraction for participants in the Forex market is that it is open 24 hours a day. It allows the participants to exit or open a new trade regardless of the hour. Traders can respond to breaking news immediately and Pand L is not affected by after-hours earnings reports or analyst conference calls. Next, we will explore the superior liquidity in Forex trading. Forex traders do not have to worry about being wedged in a position due to a lack of market interest. As the average trading volume is 50 times larger than most Stock Exchanges, there are always brokers or dealers willing to buy or sell currencies in the Forex markets. The liquidity of the Forex market, especially the major currencies, helps ensure price stability. Traders can almost always open or close a position at a fair market price. On the contrary, traders in the stock markets and other exchange-traded markets are more vulnerable to liquidity risk due to a lower transaction volume. Comparing with Equities, Forex offers a greater Buying Power. Forex traders are offered 100:1 leverage by major online Forex dealers, which is substantially beyond the common 2:1 margin offered by equity brokers. Unlike most of the stocks which require you to fork out a few thousand dollars to trade just a few lots, in Forex, you are able to open an account for just USD400. For those with a low start up capital, it is much more cost-efficient to trade Forex in terms of both commissions and transaction fees. Some brokerage house charges a fixed commission for the each currency traded, and at the same time offering zero to 1pip (the minimum increment of any currency) spread(the difference between the buy and sell price). Another advantage of the Forex market is that there is no bear market; per say. Currencies are traded in pairs, for instance, US dollar versus YEN or US dollar versus Swiss Franc. Trading always involves buying one currency and selling another. The potential for profit exists as long as there is movement in exchange rate regardless of which way the market is moving. This means a trader has an equal potential to profit in a rising, or falling market, provided you pick the right side; potentials profit ALWAYS exists. Sebastian Sim I m a 31 year old Singaporean. Who started my trading journey since 2004. Now, I focus mainly in Stock Options, Forex and Unit Trusts(Mutual Funds) Investments. I ve started a site The Trading Zone - a site about trading pyschology, Forex trading, investments and other topics that interests me from time to time. sebastian-sim.blogspot.com