Forex: the benefits of commercial foreign exchange market
Monday, 28 July 2008
Commercial foreign exchange market has become very popular in recent years. Why is it that traders around the world see the foreign exchange market as an investment opportunity? We will try to answer this question in this article. It will also discuss some differences between the foreign exchange market, the stock market and futures market.
Some of the benefits of commercial foreign exchange market are:
President liquidity.
Liquidity is what really makes the foreign exchange market differs from other markets. Foreign exchange market is more liquid financial market in the world with nearly $ 2 trillion traded daily. This ensures the stability of prices and better trade execution. To allow traders to open and close the transaction easily. As such magnitude, which makes it difficult to tamper with the market extensively.
24hr market.
This is one also one of the biggest advantages of Forex trading. It is all over the Place Market, the market opens on Sunday at 3:00 pm EST when New Zealand begins operations, and closes Friday at 5:00 pm EST, when the end of San Francisco. There are transactions in virtually every time zone, allowing active traders to choose at any time of the trade.
Influence trading.
Commercial foreign exchange market and provide greater purchasing power more than many other markets. Some brokers offer foreign influence up to 400:1, allowing the merchants in the margin only 0.25% of total investment. For example, a trader with 100:1 mean to have a position of 100000 U.S. $, only U.S. $ 1000 on the sidelines there is a need to be able to open this position.
Lower transaction costs.
Nearly all brokers offer the Free Trade Commission. The only one who suffered traders in terms of cost in any transaction is the spread (the difference between purchase price and the sale of each currency pair). This proliferation can be a low 1 PIP (the minimum increase in any currency pair) in some couples.
Low minimum investment.
Foreign exchange market requires less capital to start trading more than any other markets. Initial investment could reach a minimum of $ 300 U.S., depending on the leverage offered by the broker. This is the great advantage since forex dealers capable of keeping the investment risk to a minimum.
Specialized trade.
Liquidity of the market allows us to focus on a few instruments (or currency pairs) as the core of investments (85% of all business transactions carried out on seven major currencies). Allowing us to monitor, and at the end of each instrument to know them better.
Business from anywhere.
If you do a lot of travel, you can trade from anywhere in the world only after connecting to the Internet.
Some of the most important differences between foreign exchange market and other markets are explained below.
Foreign exchange market, compared to stock markets
Liquidity
Forex market: close to two trillion dollars of daily volume.
Stock Market: about 200 billion dollars on a daily basis.
Trading Hours
Forex market: 24hr market, 5.5 days per week.
Stock Market: Monday through Friday from 8:30 to 5:00 EST environmentally sound technology.
Profit potential
Forex market: in both rising and falling in global markets.
Stock market: Most traders / investors profit only from the rise in global markets.
Transaction costs
Forex market: Commission for free and narrow margins.
Stock Market: High Commissions and transaction fees.
Purchasing power
Forex market: an increase of up to 400:1.
Stock Market: influence from 2:1 to 4:1.
Specialization
Forex market: the size of most (85%) reliance on major currencies (U.S. dollars, euros, Japanese yen, pound sterling, Swiss francs, almost AUD.)
Stock Market: More than 40000 of selecting stocks.
Foreign exchange market against futures market
Liquidity
Forex market: close to two trillion dollars of daily volume.
Futures market: around 400 billion dollars on a daily basis.
Transaction costs
Forex market: Commission for free and narrow margins.
Futures market: the high fees committees.
Margin
Forex market: the fixed exchange rate, on the sidelines of every position.
Futures market: different levels of attitudes overnight on the sidelines of today's time positions.
Trade execution
Forex market: immediate implementation.
Futures market: consistent implementation.
All this makes the foreign exchange market very attractive to investors and traders. But I need to make something clear, despite the benefits of commercial foreign exchange market is notorious; it is still difficult to achieve commercial success foreign exchange market. It requires a lot of education, discipline, commitment and patience, like any other market.
Labels: forex
posted by Master @ 03:46,