A large number of trader are attracting towards Forex trading because of the unlimited benefits offered by this market to its traders. Some of them are given below:
No commission: no commission, no exchange fees or no brokerage fess is charged by the Forex brokers. Most of the brokers get spread for their services. Spread is the difference between the bid and the ask price.
No middlemen: there is no need of middlemen in the spot currency trading and you can trade directly with the market.
No fixed lot size: in case of future markets, contract sizes or lots are determined by the exchanges but in spot Forex there is no fixed lot size and you can determine your own lot. This feature allows the traders to take part in the currency exchange market with accounts as little as $25.
Small transaction costs: the transaction cost or spread is very low. Usually it is less than 0.1% under normal market conditions. At larger broking firms, the spread offered by the brokers could be as low as 0.075%.
Remains open for 24 hours in a day: since the Forex market remains open for 24 hours in a day therefore there is no need to wait for the opening bell. This feature provides excellent opportunity to those traders who want to trade on a part-time basis. You can choose the time of trading according to your convenience.
No one can bend the Forex market: since the Forex market is very huge and has a large number of participants therefore no single person or unit can control the market prices.
Leverage: only a small amount of money is needed to control a larger contract in Forex trading. Leverage provided by the brokers help the traders to make nice profits. For example, if a Forex broker offers 50:1 leverage then a deposit of $50 would enable the trader to place a trade order worth $2,500. Similarly with a margin deposit of $500, a trader could control a trade worth $25, 000. Although leverage provides opportunity to participate in the foreign exchange market with a small amount of money but without proper risk management, this may lead to heavy losses.
High liquidity: since the Forex market is very large therefore it is extremely liquid. This allows you to buy or sell currencies with a single click of mouse under normal market conditions. You can also set your trading platform to close your position automatically once your desired profit level has been reached or if your trade is going against you.
Less entry barriers: it is very easy to enter Forex market because of the ‘mini’ and ‘micro’ trading accounts offered by the Forex brokers. You can start Forex trading with an investment as low as $25. Therefore an average trader that does not have large capital may also participate in online trading.
Availability of free stuff: most of the Forex brokers provide free ‘demo’ accounts to build trading skills. They also provide free Forex news and charting services. Demo accounts are valuable resources for the financially weak traders who want to improve their trading skills before opening a live trading account and risking real capital.
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