Is Forex Trading for You?

Why is forex trading such a hot money maker?

The FOREX markets have unique features offering more potential for profitable trading in all market conditions than any other asset class. Here is a summary of what makes forex trading so unique.

The forex market is a 24 hour market. Or be exact almost 24 hours. There are a few hours with nearly no trading between the time when California stops trading but it is still too early for the Australian traders to be out of bed yet. And other the weekend the market is dead as well.

Ok, but compared to all other markets and for all intent and purpose, this is a 24 hours market. Meaning that you can take advantage of all the profit opportunities as they arise at any time. No need to wait for the opening like at the New York Stock Exchange or the futures exchanges.

The forex market has the highest liquidity of all markets. This is ideal for retail traders who can enter or exit the market whenever they decide to do so. There will be no or nearly no execution slippage and no risk of reaching a daily trading limit.

Forex trading provides high leverage. The highest possible leverage ratio is up to 400, compared to a leverage ratio of 2 in the stock markets. Obviously this could be a disadvantage in disguise if you do not take proper risk control measures, but the point is you can access nearly unlimited leverage.

Forex trading equates low transaction costs. For retail investors, the transaction cost is normally less than 0.1%, indeed it could be much less. At the largest dealers the bid-ask spread can be below 5 pips, but it will increases a great deal in fast volatile markets.

Trading in the forex market, there is always a good market. As trading currency pairs means selling one currency versus buying another. A bull market in the forex market is a relative concept of one currency rising versus another. In case of a positive outlook for one currency, a trader can profit by buying the currency against other currencies.

Forex trading is free trading. No one can corner or control or manipulate the market like in some commodity markets such as crude oil and others. The FOREX market is so large and with so many participants that no single entity, trader, bank or even Central Bank can dictate the market price for an extended time.

Forex trading is a fair and self-regulated market. The Foreign Exchange market can be seen as unregulated, but indeed all operations of the major inter-bank dealers making prices in money centers are regulated under the banking laws.

For the average investor looking to jump into forex trading, this market offers a lot. Start cautiously, learn the ropes and only then trade more aggressively.