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The Advantages of Trading Foreign Exchange

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The Advantages of Trading Foreign Exchange

Post by adamsmiths on Thu Aug 18, 2016 1:16 pm

One of the quickest ways to make money is to invest money in the foreign exchange market. If you know the exact amount of risk which is associated with it, then it would be possible for you to gain the huge rewards. Though I’m far from suggesting that the foreign exchange market is a completely safe place, we should have a look at some of the biggest advantages which would make foreign exchange trading an extremely profitable proposal: (shared by easymarkets.com)

No Middleman Troubles:
When it comes to foreign exchange, you should be trading directly with the market that sets prices on a definite currency pair. All orders are directly sent to the liquidity providers without any kind of intermediaries. One need not say how much time it saves. The risks of encountering broker fraud are very less.

You Can Trade on Margin:
Trading with margin would mean that a trader is trading by making use of a margin account. Using this would allow you to buy more currency for a particular price that is much less compared to the price that one would be needed to pay.

For example, trading with 1:100 leverage would mean that a 100 EUR margin deposit would enable a trader to purchase or sell currency worth 10,000 EUR. Trading through leverage would also be a huge gamble, since without proper calculation of risk, extra dependence on leverage can cause somebody to have huge losses. However, there is a catch here: One can only trade using leverage if they are using risk capital.

High Liquidity is Available:
Owing to its huge size, the foreign exchange market would be able to boast of having high liquidity. Under normal market conditions, it would be possible to sell and buy currencies that cost much more than can be afforded by a small trader. One can also set their online trading platform to automatically “lock” a position once a targeted amount of profit can be reached. If you think that you’re incurring a loss, then you can press the “stop loss order” button.

Lot Sizes are Not Fixed:
”Fixed Spot Size” is an alien concept as far as the forex trade business is concerned. If traders use this feature, it would be possible for them to participate with a minimal trade size of 0.01 lots (1000) with the deposits which are as small as about 100 Bucks (Dollar, Yen, Euro, and Pound).

24-Hour Trading:
It is a twenty-four hour market. Login is permitted at any time you would wish, from any location. This provides huge advantage to part-time traders.

Nobody Can Corner the Market:
Owing to the spread of the market, it’s completely impossible for one particular person to monopolise the market for long periods of time.

adamsmiths

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