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There are several advantages of Forex trading towards some other types of financial trading.
When talking about various investments which are accessible to almost everyone there is one type that comes into mind. The Forex market has many advantages towards other types of trading. Because it is an over the counter market the Forex market is open 24 hours a day compared with the the regular stock or commodity markets. Most investments need a significant amount of money before you can take advantage of that investment opportunity. You only need a small amount of money to trade Forex. Every person can enter the market with as little as $1 to trade a "micro account" that allows you to open positions of 1,000 units. One lot of 1,000 units of currency is equal to 1 contract in micro account. Each "pip" (the smallest currency rate movement up or down) is worth $0.10 profit or loss which is depending on wheather you are going with the market or against it. A Forex mini account can give you control over 10,000 units of currency where one pip is worth $1.00. While a standard account can give you control over 100,000 units of currency where a pip is worth $10.00. Forex is one of the most liquid markets, too. When you trade currencies on the Forex market you have full control of your capital which means that you can buy and sell your positions anytime during the market open period. This is a definite advantage because if you need to use your account money it can be accessed immediately without additional commission or waiting periods. Many other investments types need holding your money up for rather long periods of time. With a small amount of money in Forex you can control bigger market positions using the leverage or margin trading. A leverage of 1:100 is common in the Forex market. It allows you to control amounts 100 times bigger than your own capital while leverage of 1:500 and 1:1000 can be found with some offshore firms. Forex traders can profit in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit because short-selling is a subject to exact limits in stock exchanges. Forex traders can profit during both uptrends and downtrends. Forex trading is risky but with a good trading system, good money management and some self-discipline the risks of Forex trading can be reduced significantly. The Forex market can be traded at anytime and anywhere. As long as you have access to internet you have the possibility to trade the Forex market. An important thing you should have in mind before jumping into trading currencies is that you should practice with "fake money" on a demo account. Most Forex Brokers offer demo accounts where you can download their trading platform and practice in real-time with real market data but with "fake money". Profitable demo trading can not guarantee success with real money but practicing can give you a big advantage to become better prepared when you start trading with real money. |
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