What are the Benefits of Forex Trading?
The Forex market offers multiple advantages over other trade methods, and these benefits entice new traders and investors to trade internationally. After you’ve learned the ropes with us, you’ll see how each benefit that we’ll discuss below is unique to the Forex market. To the beginner who’s been researching multiple investment methods, the Forex option looks too good to be true. It guarantees no regulatory fees, data fees, and no commission.
There are many benefits to trade Forex; there are also associated risks to trading Forex, just like any other market. Hence, inexperienced traders should not take learning to trade Forex for granted and learn the ropes early on.
Usually, Forex traders have many reasons for entering this market, like speculating on geopolitical events and diversifying portfolios. Also, Forex trading is a haven for businesses operating outside their foreign market since they get to hedge against currency risk and fluctuating interest rate.
Let’s dive into each benefit and see for yourself if Forex trading is worth the shot to become fully dedicated to the Forex world.
Anyone Can Do It
We cannot sufficiently emphasise that anybody can get into trading Forex. This is a good option for a side gig if you have a full-time job or even if you want to invest part of your savings to gain long-term wealth.
Unlike other markets, Forex is accessible to anyone, even with low start-up capital, which is why hobbyist traders consider it the number one trading option.
Of course, this doesn’t imply that you’ll become instantly good at it. Take it slow and warm yourself up using demo accounts before investing your own capital.
Biggest Financial Market in the World
We already gave you a glimpse of how big this market is. The good news is that this behemoth keeps on growing, and the numbers show that it will not cede its status as the largest market anytime soon.
Every day, between four and five trillion dollars are traded on average. Consider these statistics to help you get your head around this number: that’s around 200 billion dollars every hour or three billion dollars per minute.
There are Always Trades to be Made
You might be wondering why it is even wise to enter the biggest marketplace in the world. Well, we’ve got one word for you: liquidity. There are always trades to be made. At any hour, any sum can be traded regardless of its volume. With just one click on a digital Forex platform, you can get the deal you want, and the party you’re trading with will be happy too.
Like any market, the Forex marketplace has its silent hours, but we can safely claim that there are always trades to be made.
The Forex Market is Decentralised
Trading in the biggest marketplace also has other perks. In fact, no single financial institution can control the prices for a significant amount of time. The Forex trade is decentralised, so it calibrates itself back and evens things out. Forex trading is only influenced by the economy itself, no entity involved in the trading. Everybody’s equal, so you have nearly the same influence as the largest bank in Forex trading.
Even more, no middlemen are required for the exchange to happen, but you can have a broker that facilitates the transaction.
The Forex Market Never Sleeps
We talked about the Forex market having some inactive moments, but we never emphasised the fact that it never sleeps. To be more specific, it opens when the Sydney session starts and closes when the New York session ends. The Forex market is open 24 hours, 365 days a year, but for traders like us, it’s open five days a week, with a break from Friday 5 pm till Sunday 5 pm.
This means that you don’t need to stick to a certain time to get the right opportunity to trade. This way, Forex allows you to trade at your own pace and schedule. The market doesn’t dictate anything, so you get to trade on your own terms. If you want to be passive or active, it’s totally up to you. In the Forex world, you’re free.
Commission Free on Most Accounts
Most brokers may or may not charge a flat commission fee or a fee based on trade transaction percentages. Generally, there are no commissions for trade, or there are low commission rates for big volume trade processes. This exists because most brokers earn their revenue via the “spread”. This is the difference between the bid and the asking price.
These spreads tend to be particularly low for Forex traders, making it a very cost-effective trading market. The good news is that spreads are usually minimal with no incurring fees to brokers, as we’ll see in the next section.
Transactions Costs are Cheap
In general, when you are trading, you pay transaction costs for the effort that brokers applied to facilitate the trade. In Forex, large volumes can be transferred from one currency to another with small spreads measured in pips. A pip is 1/100 of a per cent, or in other words, the fourth place after a decimal. So, if one bid price is 1.3242 and the asking price is 1.3245, the spread for the transaction is three pips.
When a company is buying or selling goods and services in a foreign country, they are always exposed to fluctuations in the values of currency pairs. Forex is ideal for companies in this situation since it fixes a rate at which their transactions can be completed.
Trading with few transaction costs is clearly a competitive advantage for Forex when compared to other markets. However, when transaction costs or commissions do exist, what might sound like a good deal to inexperienced traders might not be the best bargain out there.
So, at G7FX, we teach you how to evaluate the fees you give to brokers and how to find one suitable for your needs.
It’s Easy to Learn with a Risk-Free Demo Account
We believe getting you started on a Forex demo trading account would be the risk-free environment you need to take on trading confidently on your own. This type of “tester” service highlights your trading mistakes in Forex for you to learn from them.
You will become familiar with the market trading patterns and even develop your own Forex risk management techniques, all with no commitments and no capital invested.