The Benefits of Forex Trading

No Short Selling Restrictions

Forex trading always involves buying one currency and selling another, so traders can easily trade in a rising or falling market. There is no Zero Uptick rule or any other restriction against shorting a currency.

At $1.9 Trillion Per Day, Forex is the Most Traded Market in the

World

The sheer volume of Forex helps to facilitates price stability in most market conditions. What's more, almost 85% of all currency transactions involve the 7 major currency pairs.

Trade on Your Schedule; Respond to Changes in the Market

Forex is a true 24-hour market, open continuously from 5:00pm ET on Sunday to 5:00 pm on Friday. With three distinct trading sessions in the US, Europe and Asia, you can trade on your own schedule and respond to breaking news. A trader can put on or take off positions literally any time of day or night, regardless of their base of operations. That opens the game up to a great many individuals who might not otherwise have the time available to trade. Consider, for example, the working person with a 9 to 5 type of job. Most folks like that cannot be expected to operate effectively as day traders in a market such as stocks. They just can't spend the requisite time watching the market during trading hours. With forex, though, one could theoretically day trade in the evenings after work, or in the mornings beforehand. The forex market is never really closed (yes, in some cases you can even trade on the weekend!).

Up to 200:1 Leverage

With more buying power, you can increase your total return on investment with less cash outlay. Of course, increasing leverage increases risk. With $1,000 cash in a margin account that allows 200:1 leverage (.5%), you can trade up to $200,000 in notional value.

No (or low) Transaction Costs

For most traders, the forex market also offers the benefit of no transaction costs. For the most part, forex brokers do not charge commissions (if they do, they are relatively small). There is, of course, the bid/offer spread, which can be viewed as a transaction cost, but the reality of the situation is that most traders buy at the offer and sell at the bid in whatever other market they trade, so that's really no different. Actually, the forex spreads can be quite small in the major currency pairs.

Low (or no) Account Minimums

Forex trading is also open to a wider trading demographic in that there are many opportunities to open smaller accounts than is the case in other markets. In fact, there is at least one broker which has no minimum account size. What's more, they also have no minimum trade size. That sort of flexibility opens the door to essentially anyone who wants to explore forex trading. This isn't to say that all brokers are that flexible. There are, however, a great many which offer so-called mini-contracts.

Multiple Trading Vehicles

Additionally, forex trading can be done in a number of fashions. Many folks tend to think strictly of the spot market. While that is certainly the largest of the components, it is not the only one. The futures market has become a bit more attractive with the expansion of e-mini currency contracts. There are futures options as well. What's more, an array of other option trading alternatives have been popping up, providing traders even more ways to take positions in the forex market.

Always Moving

One of the biggest attractions to forex trading is that there's just about always something moving. There are a number of primary currencies involved, each of which is continuously interacting with all the others. Chances are, at any given time, there is movement in at least one of those exchange rates based simply on the sheer volume of trading and the number of global news events providing impetus to action.

Easily Trade Long or Short

In the stock market there are restrictions imposed on selling short. In forex there is nothing of the sort. It is just as easy to taking a short position as it is to take a long one.