In the complex world of the financial market, you can trade almost anything. You can trade complex derivatives like lumber, grain, corn, or make money on more traditional asset types like ETFs, bonds and stocks. You can also trade currencies. This article explains why currencies are better than other assets.
In general terms, Forex trading is making money on fluctuations in currency rates. What are the advantages of working with currency pairs for a beginner trader?
Forex market is open 24 hours a day
In general terms, Forex trading is making money on fluctuations in currency rates. What are the advantages of working with currency pairs for a beginner trader?
Forex market is open 24 hours a day
The shares are traded for a short period of the day. In the USA, for example, exchanges are open from 9:00 to 16:00. This means that you can only make money for a limited amount of time each day. On the other hand, the Forex market is usually open 24 hours a day throughout the working week. This is due to the fact that the currency is traded in major financial centers such as Tokyo, Shanghai, Hong Kong, Australia and London. Since these cities have different time zones, the market may be open every day from Monday to Friday, even on holidays.
High liquidity
High liquidity
Forex vs Stocks: Why Trade the Forex Market
As an investor, liquidity is very important to you. For example, if you are a developer, you can build a good house - but it is not a fact that someone will be interested in this real estate and a buyer will be found quickly. This is because real estate itself is not very liquid. On the other hand, forex is very liquid, which means that you can buy a currency pair now and sell it the next minute. More than $ 5.3 trillion in currencies are exchanged in this market every day.
The ability to use leverage
The ability to use leverage
Most of the companies that provide Forex trading tools also offer leverage. Leverage is a type of loan provided to a client for investment.
How it works? For example, suppose company A is trading at $ 5 and you have $ 1,000 to invest. The maximum number of shares you can buy is 200. Therefore, if the share price rises to $ 8, you have $ 1,600. That's a $ 600 profit.
If, on the other hand, someone lends you another $ 1,000 to invest, your profit will be $ 1,600. Likewise, most brokers are willing to provide you with the leverage to maximize your profits by being willing to accept a higher degree of risk.
An abundance of data
How it works? For example, suppose company A is trading at $ 5 and you have $ 1,000 to invest. The maximum number of shares you can buy is 200. Therefore, if the share price rises to $ 8, you have $ 1,600. That's a $ 600 profit.
If, on the other hand, someone lends you another $ 1,000 to invest, your profit will be $ 1,600. Likewise, most brokers are willing to provide you with the leverage to maximize your profits by being willing to accept a higher degree of risk.
An abundance of data
If you invest in a company, you will only receive a limited amount of data every day. On the other hand, in forex, new data usually appears all the time. For example, the US may release unemployment statistics today, while Australia will release its manufacturing data the next day. This data can help you make the right decision to buy a currency or open a short position.
Trade from anywhere in the world
Trade from anywhere in the world
Many countries have restrictions on who can buy stocks. For example, only Americans can buy shares in US companies. On the other hand, currencies can be traded from most countries.
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