forex-advantages

Investors and speculators using the Internet as an investment tool will find that the Forex market offers opportunities unknown elsewhere. The 200:1 entry leverage value is an example. Brokerages will have margin calls set at different levels, exact leverage may vary. The traders cost of doing business is called the Spread, which is the difference between the bid and the ask price on your chosen currency pair. The aforementioned items are a few of the controls that will effect your outcome


24-Hour Trading
Forex is a true 24 hour market, 5.5 days a week, which offers major advantages of accessibility. Investors are able to trade at any hour, thus allowing more flexibility for personal, business and social activities. Whether trading at 6am, 4p.m., or even 1am, there will always be buyers and sellers actively trading foreign currencies. Such flexibility allows traders to immediately respond to breaking news and other political factors driving the market. Comparing the equities market, it has several limitations. In the US, for example, equities traders have access to E.C.N.s (Electronic Communications Networks), also known as “matching systems”. These networks are established to provide a method for equities traders to buy and sell amongst each other. Such networks are usually not able to offer as tight of spreads as would be offered during normal market hours, thus most trades are not executed at a fair market price, subsequently there is no guarantee that every trade will be executed.

Unmatched Liquidity
An investment market with lacking liquidity, or a lack of buyers and sellers at certain times, is often the demise of traders who need in or out of the market without delay. The global network of governments, banks, corporations, hedge funds, and individual traders that collectively drive the Forex market, are in essence, also driving the world’s largest network of liquidity. Such high trade volume works to ensure trade execution and the stability of prices, regardless of the time of day. Compare this to equities traders, they are more susceptive to liquidity risk and are subject to potentially wider dealing spreads and larger price movements. Liquidity in the equities market really does pale in comparison to that of the Forex market. return to top.