Benefits of forex trading

Did you know that the forex market has a trading volume of nearly $7.5 trillion daily? Or that it is even larger than the share market? In the digital sphere, where different currencies are exchanged, the forex market has a lot of surprising benefits that traders may like.

When traders decide the kind of market they plan to are looking at two things

optimal trading conditions

the best opportunity to make a profit

There are plenty of reasons why traders feel like participating in the forex market, but let’s just look at these X reasons why you should take a dip in this market.

Going short or long

Traders can go short on other markets using derivative products, but short selling is an intrinsic part when they trade in forex. After all, a trader is always selling one currency (the quote currency) to buy another (the base currency). The price is determined by how much a single unit of the base currency is worth in the quote currency.

Open 24 hours a day

For 5 days a week, the forex market is open 24 hours a day. Traders can trade from 9 pm Sunday to 10 pm Friday (GMT). The long hours are due to forex transactions happening over the counter between the parties directly and not through a central exchange. So, a trader may be in the US financial market, directly trading with some in the Dubai financial market, without any central exchange acting as an intermediary. And since it is a global market, traders get an opportunity to try out different active sessions.

High liquidity

Remember the numbers we shared at the beginning of the article? The forex market is the most liquid market globally. After all, unlike any market, many buyers and sellers are always seeking to make a trade at any time. A large chunk of transactions in the market is by individuals, companies and banks, with the vast majority looking to make a profit. The high liquidity also ensures transactions are completed quickly and easily, leading to lower transaction costs. What this means for traders is that it allows them to speculate on price movements.

Leverage

One of the critical features of forex trading is leverage. What it means for a trader is that they can put up a small initial deposit of the total value to enter a trade. Whatever a trader makes - profit or loss - will reflect the total value of the position at the point it is closed. This offers traders an opportunity to make large profits from small investments. However, it can also amplify losses, which is why it is essential to consider the total value of the leveraged forex position. Many firms provide CFDs for trading foreign exchange pairs.

Trade a wide range of currency pairs

As forex trading is global, it gives traders an opportunity to trade with a wide range of currency pairs, predict international events and how major and minor economies are faring. To put it in perspective, firms that have online currency trading can help investors choose from over 90 currency pairs, including:

Major currency pairs, e.g., GBP/USD, USD/JPY, EUR/USD

Minor pairs, e.g., USD/ZAR, CAD/CHF, SGB/JPY

Emerging currency pairs, e.g., EUR/RUB, USD/CNH, AUD/CNH

Exotic pairs, e.g., TRY/JPY, EUR/CZK, USD/MXN

Access to tools to trade better

Today, beginners and seasoned traders can use currency trading online platforms like the web, mobile, tablet or even specialist platforms to up their trading game. More often, you are likely to get curated features to improve your trading, which includes risk management tools, forex-designed products, interactive charts and integrated news feeds.

You can begin online trading in UAE or the US in the forex. All you need to do is ensure you have a good strategy in place and that it aligns with your financial goals.