If you are reading this article, you are also probably looking for some good FOREX trading training course. Before you proceed any further, ask yourself why you want to trade in the FOREX market. Yes, it is a profitable business. But, it is risky like no other business is. When there are several ways in the world to make money, why FOREX?
As a trader or a prospective trader, you must be able to answer what makes FOREX trading better than any other business including trading in the stock market.
Liquidity
Liquidity of anything is the ease with which the thing (commodity) could be converted into money while least affecting its value. Liquidity in the FOREX market is very high because what you are trading is already money! You are trading with the most liquid commodity on the planet.
The liquidity of a market increases with its turnover. The daily turnover, on an average, in the FOREX market is about $4 trillion. This amount is greater than the money traded in all the stock markets of the world put together. Not only does high liquidity make your trading profitable, it also makes insider trading impossible.
Leverage
Leverage determines the extent to which one could control a large amount with a relatively small amount. For example, while trading on margin, you invest a small amount into a broker account to control a much larger amount. What actually happens is that the broker loans you a larger amount. Whether or not the broker actually invests the money in the market shall depend on how his business functions.
Traders can easily have a leverage of 100 to 200 times their actual investment. Such leverage is unattainable even in the stock markets and empowers the trader to make huge profits with very little investments.
Relative Pricing
There are no fixed prices in the FOREX market; all prices are relative. When the price of one currency rises, the price of another is bound to fall and vice versa. Thus, you can always make profit irrespective of what happens to a certain currency.
You never have this advantage in any other market. Take the stock market for example. A major crash in the stock market brings down the value of all the stocks. The only option you have during a stock market crash is to leave the market as soon as possible. This will never happen in the FOREX market as the price of all the currencies will never fall together.
Time zone- Free Trading
Trading in the FOREX market is not restricted to any time zone. So, you always have the option to trade at any time of the day that is convenient for you. The only time when you cannot trade is during the weekend.
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