5 Main Features of The Forex Market
The forex market allows traders the chance to buy, sell, exchange and speculate on currencies. Apart from offering a platform for buying, selling, exchanging and speculating on currencies, the forex market as well makes currency conversion possible to allow smooth international trade and investments with brokers. The forex market has main features which distinguish it from all other markets and makes it attractive for traders who want to boost their profits.
What are the main features of forex market?
1. The market is highly liquid
The forex market is attractive to retail traders globally given its benefits. The enormous daily trade volume in the forex market represents the most extensive global asset class. This vast trade volume makes the market highly liquid. The forex market allows interested individuals to buy and sell their preferred currencies. The fact that the forex market is highly liquid makes it possible for traders to readily exchange currencies without having any effect on the price of the traded currencies.
The implication is that whether a trader deals in large trade volume or minimal trade volume, he is sure to get an equivalent price for the currency within a particular time the trade order was carried out. The high liquid nature of the forex market makes it possible for traders to obtain the profits they expect during the time they place the trade order.
2. The forex market trades round the clock, 5 Days a Week
The forex market is functional 24 hours every day apart from the weekends. The 24-hour trading opportunity is one of the reasons why many people find the market attractive. It makes it convenient for virtually anyone to invest in including students and people who engage with work during the regular trading hours and days. The twenty-four hour trading of the forex market implies that the market conditions and exchange rate can change even during the odd hours requiring traders to monitor the market during these periods.
The leverage provided in the forex market is the best type of leverage ever available to traders and investors. The leverage is a loan offered to a trader by his broker. Leverage helps the forex trader to boost their profits by assisting the traders to expand their trade volume. Leverage allows traders to increase their earnings or loss with regards to the account trading size.
For instance, a forex trader who has 1,000 dollars in his forex market account can trade forex up to 100,000 dollars with a margin of one percent and a 100:1 leverage.
4. The forex market is very transparent
The possibility to trade forex online is a big boost to the transparency of the forex market. One of the critical benefits of forex trading is that it gives traders the chance to trade directly with brokers. Executing trade with a reliable and reputable trader helps the forex trader to be successful, provides traders with streaming and tradable pricing. It as well helps the trader to know the difference between analytical prices and executable prices. Online forex trading also gives traders fair pricing, makes the market more efficient through the provision of real-time portfolio and account tracking ability.
5. Minimal cost of trading
The forex market gives traders chances to trade forex with a mini trading account as opposed to trading in the stock. Some forex brokers offer traders the opportunity to open a mini account with just 25o dollars or as low as 50 dollars. The low cost of trading makes the market accessible to small and retail investors. Lower trading costs also limit the amount of loss. The cost trading forex doesn’t come with commissions like other market but only includes that of spreads and the difference between the asking price and selling price.
Conclusion: Availability of strong trends in the forex market
The foreign exchange market is a global decentralized or over-the-counter (OTC) market for the trading of currencies provides traders with correct market data which help them to make profits. The market trend allows traders with the analysis of the market direction. Majorities of forex traders make use of technical study to evaluate the history of the forex market data, compares it with the present data and use it to detect the market trend.