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5 Reasons for Becoming a World Currency Trader

    IndianMoney.com Research Team | Saturday, May 02,2009, 03:14 PM
 

The foreign currency exchange market offers today's investor numerous rewards and here are some reasons why you might want to become a world currency trader.

A Market Which Never Closes

A lot of the trading markets around the world are located in fixed locations and operate within strict trading hours often limited to just five or six hours a day between Monday and Friday. The Forex market however is open 24 hours a day. This means that traders can not only take benefit of international actions and react accurately as they happen but they also have the ability set their own trading hours. If you prefer to work in the mornings then that are fine but if this doesn't suit you then you can decide to trade through the afternoon late evening or even in the middle of the night if you wish to.

Low Trading Costs

In many markets like the equity market traders not only have to pay an increase (the difference in price between buying and selling a stock) but also have to pay a commission to the broker. On small trades this commission can naturally be about $20 and this can rise rapidly to over $100 for larger trades. Because the foreign currency exchange market is a totally electronic market many of the traditional trading costs are eliminate and you are in influence reduced to paying nothing more than the spread. In addition the enormously liquid nature of the global currency exchange market means that spreads are normally much tighter than those seen in other markets.

The Ability to Trade on High Leverage

In most markets wherever a trader has a chance to trade on leverage the leverage offered is often quite low. In the case of equity markets for example professional equity day traders will usually function on a leverage of about ten times their capital. In the Forex market by difference it is quite general to find that traders are permitted to trade at one hundred to two hundred times their capital. A problem of high leverage is that it can of course lead to high losses as well as high gains. Though within the foreign currency market risk management is extremely strongly prohibited.

Limited Slippage

In currency trading trades are executed instantly using real-time prices at which firms will buy or sell the currencies quoted. In almost all cases this means that the price you see and the price you pay are the same. This is not regularly the case in other markets where there can be often considerable delays between placing an order and that order being executed during which time the price will often move against you.

The Chance to Profit in both Rising and Falling Markets

Equity markets follow rising and falling trends (cycling between Bull and Bear markets) but the Forex market does not suffer this cycling which comes from structural bias in the market. World currency trading always involves two currencies so that if you are down on one currency then you are up on the other. There is therefore always the possiblility for making a profit whether the market is rising or falling.

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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