An Introduction to Currency Trading - Concluding Part
This is the last part of the series of articles on "Currency Markets."
24-hour Trading
One of the principal advantages of the forex market over other markets is that it is a 24-hour market. You can trade from anywhere in the world at any time. You can respond to breaking news immediately and it is not affected by after-hours earning reports like the stock market.
Liquidity
Each day's trading volume is around 1.7 trillion dollars which is 50 times larger than the NYSE. This ensures price stability and enables investors to open or close a position anytime.
Leverage
There is a higher amount of leverage in the forex market. Investors can execute trades up to $500,000 with an initial margin of only $10,000. This type of leverage allows investors to maximize their profit but the potential for loss is equally great.
Lower transaction costs
Commissions and transaction fees are lower compared to other markets.
Equal access to market information
In stock markets, professional traders have an advantage over others because they are the first to know corporate information and earning estimates before they are released to the general public. In the forex market, every player can take advantage of market news as soon as it becomes available.
Forex market trading enables investors to earn above average returns with average risk. Before you invest in any market consider your investment objectives and risk appetite. This will be an important factor in determining the success of your trading. Changing economic and political conditions affect the price or liquidity of a currency. Investors should follow risk-reducing strategies such as 'stop-loss' and 'stop-limit' orders by which they can benefit a great deal from trading in the currency markets.
