Perhaps surprisingly to some, the foreign exchange (forex) market is the largest and most liquid trading market in the world, recording the highest volume of daily trades. But what’s all the fuss really about?
Well, today the forex educational experts over at Learn To Trade are offering up an explanation as to how and why this ever-popular trading platform became the market giant it is today.
Instant, around the clock access
One of the major appeals of the forex market is how easy it is to access. As a global trading platform, the market remains open 24 hours a day, 5 days a week, to incorporate all the world’s major time zones. As such, anyone is able to access the market from anywhere at anytime throughout their working week.
This accessibility boasts numerous advantages. Primarily, the 24/5 nature of the market enables it to appeal to everyone anywhere, with traders able to work their trades around their day-to-day life. This means that the market can be picked up at a time convenient to the trader – whether that be during their morning commute or last thing before bed.
Unrivaled liquidity
A mammoth $5 trillion worth of currency is traded on the forex market each day. As such, it’s no surprise that the market offers significant liquidity, with traders easily exchanging one asset for another.
The sheer size of this globally interconnected market means traders can easily enter and exit positions, creating greater manoeuvrability. This enables a greater volume of trades that, in turn, ensures the market is less vulnerable to price volatility. As a result, traders are typically protected from intentional price manipulation.
Minimal transaction costs
The market’s liquidity also provides traders with lower transaction costs, as a greater volume of trades leads to financial institutions and brokers charging less to set up a trade. Typically, the retail transaction cost of a trade is less than 0.1% under common market conditions, with the spread becoming as low as 0.07% on larger transactions.
Other than that, traders can expect zero commissions when trading forex. What’s more, with no clearing fees and no exchange fees this means that you take home every penny of your profit.
A digital market
The forex market can be accessed by a large array of digital trading platforms, contributing to the instant accessibility aforementioned.
However, another attractive advantage of being a digitally accessible market is demo accounts. Demo accounts are offered by the majority of online forex brokers, enabling novices to practice on the market without any financial implication. This can be particularly appealing to inexperienced traders, as it enables them to try their hand at the market to decide if it’s for them before actually risking any capital.
The advantages of the forex market really speak for themselves. From ease of access to large potential profits, it’s little wonder how and why this market continues to surge in popularity amongst experienced and inexperienced traders alike.
Author bio:
John James is a content writer for Learn To Trade, the foreign exchange education and learning specialists – offering a range of training courses to help people understand the currency trading market, as well as its opportunities and risks.