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Advantages of trading in the Forex market

{}Posted in2023/2/24 14:35:28 | 5Browse

In the past, the F cashbackforexexnessex forexrebates was mainly used by major banks, multinational companies forexcashrebate other participants with large cashback forex volumes and volumes. Smaller traders, including individuals like you and me, were unable to participate in th Forex rebate for Exness market for a long time. Now with the development of internet technology, FX forex trading is becoming the most popular investment option for the public. Advantages of trading in the Forex market: open 24 hours and closed only on weekends; high liquidity and efficiency; high volatility; very low trading costs; you can easily use high leverage (borrowed funds); and you can profit from both bull and bear markets. Continuous, 24-hour trading Forex market is a 24-hour market. You can decide to trade after you get home from work. No matter what time of the day you want to trade, the market has enough buyers and sellers to receive your trades. This feature of the market allows you to be flexible enough to manage your daily trading. Liquidity and efficiency allows you to buy or sell at the closest possible market ForexrebateforExness when there are a large number of buyers and sellers. The Forex market is the most liquid market in the world. The volume of trading in the currency market is 50 to 100 times greater than that of the New York Stock Exchange (source: Oanda.) When you trade stocks, you may have experienced a news announcement that caused the price of the stock you bought to rise or fall rapidly. Perhaps a company executive was fired by the companys shareholders or the company just released a new product and a large investor bought shares in a particular company. Stock prices can be greatly affected by the actions or inactions of one or more individuals. So if you rely only on TV reports and newspapers to get the news you need, you may have missed most of the opportunities or alerts to take advantage of them. On the other hand, the value of a currency is influenced by so many factors and so many players that it is basically impossible for any one individual or group of individuals to have a significant impact on the value of a currency. Because of the sheer size of the foreign exchange market, it is difficult to manipulate. The ability for people to insider trade is essentially eliminated. As an average trader, you also have no disadvantages. You are on a relatively equal footing with all other traders and investors as counterparties. Watch out for price gaps: for those who have traded in other markets and may be aware of price gaps. A gap is a jump in price from one price level to another without any incremental price between the two. For example, you may have traded a stock at a closing price of $10 that day, but due to some overnight event; the next day opened at $5 and continued to fall as the second day opened. The short jump introduces another degree of instability that can disrupt a traders strategy. Perhaps the most worrisome aspect of this is when a trader uses a stop loss. In this case, if a trader places a stop loss at $7 because he does not want to hold the trade if the stock hits $7, the trader will still hold the trade overnight and wake up the next day to find that he has lost more money than he expected. After looking at multiple forex charts, you will see that there are few or no price jumps, especially on long term charts like the 3-hour, 4-hour or daily charts. Volatility is a trading opportunity that occurs when the price is floating. If you buy a stock at $2, you have no chance to make a profit when it stays at $2. The size and frequency of the fluctuation level is called volatility. As a trader, you profit from volatility. In the currency market, large trading volumes and high liquidity combined with fewer instruments generate large intra-day volatility that can be exploited by day traders. The high volatility of the currency market means that a trader can make 5 times or more profit from currency trading than from trading most liquid stocks. Volatility is a measure of the maximum return that a trader can perfectly expect to generate. The volatility of most liquid stocks is between 60 and 100. (From: Oanda.) In this respect, the Forex market is a better trading vehicle for day traders than the stock market. There are usually no commissions or transaction fees for trading in currencies with low transaction costs. For Forex traders, spreads are the only cost they have to bear. Also, because of the efficient nature of the currency market, there are few or no slippage fees. Slippage is the cost involved when a trader enters a position at a price level that is worse than his or her expected price level. For example, a trader intends to buy a stock at $2.00, but when it is filled, the order is placed to buy the stock at $2.50. This 50 cent difference is the cost of slippage. The cost of slippage has a greater impact on large volume traders. When they buy large amounts of a commodity, they provide the market with too many buy orders. This puts upward pressure on prices. By the time they want to buy all the quantity they want, they get an average price for the commodity that is higher than the price they intended to buy. Conversely, when they sell a large amount of the commodity, they provide the market with too many sell orders. This puts downward pressure on the price. By the time they finish selling all the commodities, their average selling price is lower than the price they intended to sell. Due to lower trading costs, minimal slippage and high intra-day volatility, individuals are able to trade frequently and at little cost. Approximately, you are expected to pay only 0.03% of the spread on the amount of your position. To give you an example, lets say you buy or sell 10,000US for a spread of 3 pips, which equals $3. There are not many banks or people who can lend you money to trade stocks. If they do, you will have a hard time convincing them to invest in you or to invest in your idea that a stock is going to go up or down. So, most of the time, if you have a $10,000 account, you can only buy $10,000 worth of stocks. However, in the currency market, because you are able to use debit funds, you can trade $10,000 in currency and you only need from $50 (for a margin loan ratio of 200:1) to $200 (for a margin loan ratio of 50:1) in your trading account. This makes it possible for the average trader with a small trading account of less than $10,000 to profit from the fluctuations in the exchange rates of the Forex market. This idea is further elaborated in Part-Time Forex Traders. Profit from bull and bear markets When you trade stocks, you can only profit from the rise of the stock price. When you suspect that the stock price is going down or just continues to move sideways, the only thing you can do is sell your shares and stay on the sidelines. One of the disadvantages of stock trading is that individuals cannot profit from price declines. In the foreign exchange market, it is also very easy to trade on the decline of a currency, and you can profit when you think the currency is going to depreciate. This is very easy because currency trading only involves buying one currency and selling another, there is no downside to it. This is why the Forex market is sometimes called the eternal bull market.