Know the Advantages of Forex

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The global Forex market is estimated to be more than 3 trillion US$. This is undoubtedly larger than the turnover of any major stock exchange in the world and this number is increasing with each passing day. This fact proves the sheer potential of the Forex market and the growing popularity of Forex trading. There was a time when Forex trading was considered to be the forte of the corporate banks and financial institutions. Though they are still the major players in the worldwide Forex market, the number of retail investors is also increasing day by day. There are so many advantages of Forex trading. Here we are discussing some of the most prominent factors that are playing pivotal role in growing popularity of Forex.

Biggest Potential – It is the sheer size and volume of the Forex market that makes it truly most potential of any other financial market in the world. While the conventional mediums like the stock exchanges become saturated with the number of investors and traders, the Forex market has the biggest potential for any investor trading in Forex. The global dimension and the huge daily trading volumes at the Forex market make it a profitable investment opportunity.

Highest Leverage – Forex market investment offers the highest leverage in comparison with other modes of financial investment for example the stock market. In fact there are certain currency ratios for which you can get leverage in 1:100 ratios. That means with a deposit of one dollar you can invest in currencies worth 100 dollar. So with relatively smaller deposit you can invest in the Forex market and earn profit that is much higher than the deposits.

Highest Liquidity – For any type of assets and investments, liquidity is a matter of concern for the investor. Liquidity is the possibility of transforming any asset to cash without any price discount. Supposedly you are investing in the stock market. To get the profits you have to sell the stocks and there are certain charges that you need to pay to withdraw the profit that you make by selling the stocks. But in case of Forex trading, you are trading in the currency itself and hence you enjoy maximum liquidity for this investment.

Longest Trading Hours – If we consider the global Forex scenario, there is one Forex market or the other that is open around the clock. Therefore, the Forex market is open round the clock and throughout the weekdays. So it is only the weekends when the Forex market remains closed. As an investor you will have the longest possible trading hours when you are investing at the Forex market. To cope up with this long trading hours the Forex robots are designed that will take care of your trading without any intervention. These robots have made Forex trading lot easier for the retail investors.

Minimum Fluctuation – If you consider different modes of investments and financial market, you will find out that Forex market is the most stable. While the stock market can move about 15% in a single day, the movement at the Forex market can not be more than 1% in a specific day. So it is quite obvious that Forex market is the most stable financial market. So when you are investing in the Forex market you will have more time to recover your investment even when the market is falling.

Lowest Spread Rates – The term spread is used to denote the difference between the ask price and the bid price for certain currency pairs. It is considered to be better for the investors when this difference is lower and the spread rate is low. In Forex market the spread rates for the currency pairs are typically lower and hence you as an investor will have more advantage while investing in the Forex market. In fact during the last few years the spread rates have become much lower. The most commonly traded currency pairs have spread rate of only 5 pips.

Least Transaction Cost – In comparison with other forms of investment, Forex investment requires least transaction cost. As an investor you will be charged nothing or very little for trading at the Forex market. As you have least liability of the transaction cost you will be able to increase your profit from the Forex investment.

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