There are a number of reasons Forex Trading is becoming very popular. Forex Trading provides investors with the ability to grow their account quickly and produce a large return on investment. For these reasons, a number of stock traders have begun forex trading. Forex traders can grow their account quickly and produce large returns on investments due to the ability to leverage their investments. For more information about leverage, visit What is leverage?
With a total of a $5.3-trillion (USD) being traded every day, the Forex market is extremely large. Additionally, this market is constantly growing which provides traders with a great deal of liquidity. As the vast majority of trading occurs within a few currencies amongst a lot of traders, this typically makes it easier to get in and out of trades – big or small – at any given time.
The ample liquidity in the Forex Market provides traders with the ability to trade with leverage. Leverage refers to the ability that traders have to multiply gains and losses by trading the amount of their investment multiple times. Canadian brokerage firms offer up to 50:1 and International brokerage firms will offer up to 1000:1 leverage. That is, if a trader deposited $100.00 into their account and were trading with 50:1 leverage, they would be able to trade with $5000.00. By leveraging their money, traders can take advantage of small market movements. However, leveraging can also pose significant risk to traders.
Low Commissions and Trading Costs
Many ETF brokers and Securities brokers have trading costs. Conversely, Forex accounts have tight spreads and low commission structures. Moreover, there are usually no hidden fees or markups and Forex traders have the ability to trade with direct quotes.
Gain International Exposure
Forex trading is, by definition, truly international. This provides traders with the ability to gain international exposure for their portfolios while not being subject to foreign securities laws.
Trade 24 Hours a Day, 5 Days a Week
There are no set hours when a trader can trade currencies. As a Forex trader can trade in different countries during their business hours, the Forex Market is open 24 hours a day, 5 days a week. This allows Forex traders to trade whenever they want, including in their spare time.
Have the Ability to Trade Long or Short with Ease
In most financial markets, trading short can be difficult. However, Forex trading does not have the same limitations as typical financial Markets. This means that a Forex trader can trade long or short with currencies with relative ease.