Advantages of the Forex Market
Advantages of Forex - text
The FX market has huge appeal for the retail trader as it is an extremely liquid market. A liquid market means that there are a huge number of buyers and sellers resulting in swift trade execution â€“ both buying and selling – at any time within market hours.
The FX market is open 24 hours a day, 5 days a week meaning we can open and close trades at any hour of the day unlike other markets e.g. commodities and stocks.
The highest volume of trading usually takes place as the various global markets open throughout the day â€“ starting in Sydney, then Tokyo, then London and finishing in New York.
Due to the high level of liquidity in the FX market most brokers will offer a higher leverage than other markets. The basic concept is that a trader only requires a small percentage of the overall price of the position. For example, if we have $250 to invest and leverage of 400:1 we could take a position of $100,000.
Therefore smaller movements in the price of a currency have greater weight which can lead to greater gains on smaller investments.
Due to the high level of leverage it is possible to open accounts with FX brokers from as low as $100. This gives traders the opportunity to invest in markets which would normally be out of their reach.