The Advantages Of Trading Forex

Forex or Foreign Exchange is the largest financial market in the world with around 3 trillion dollars exchanging hands per day

. In the last decade this market has opened up to retail (small) traders, before 2000 it was mainly large banks and corporations that utilized the currency market.

One of the biggest advantages of trading forex is that you do not have to pay commissions on each trade. You are charged a few points as you enter the trade, so if for example you enter on a long trade for the Japanese Yen at 87.00 and the spread is 2 pips (points) then you would really be entering at 86.98. So in this case you would need the trade to move 2 extra points then where you planned to take your profit.

There are some forex accounts called ECN which do charge a commission and offer cheaper spreads then most brokers. It is a good idea to shop around as there are many differences in the spreads offered by various brokers. Also, on that note there are many brokers in forex that are simply not trustworthy. It is a good idea to do a Google search for the broker you are considering plus the word "review" in order to find out if others are having a good experience with that company or not. In many cases you will hear that people were taken advantage of by the broker. A good site to look at reviews is ForexMagnate.

Another advantage of Forex is that the minimum to open up a trading account is very low. You can even open up a micro account so that the risk can be as low as 1 cent per point. This is great if you are testing a strategy and want to get the experience of live trading without hurting your wallet.

Another advantage is that it is possible for almost anyone to get a forex trading account as long as they are the minimum age. You don't need to prove any special skills or qualifications.

The currency markets are open 24 hours a day, 5 days per week. It is the only market that doesn't sleep and there are many opportunities for people all around the world.

You can trade the markets on a short intraday basis or you can also make long-term trades. If you think the Great Britain Pound is going to weaken in the coming year against the US Dollar for example, you could hold a position trade short. If you plan to trade long term it is a good idea to check out the swap rate as you will likely have to pay a small fee per day to hold your trade.

by: Jarratt Davis

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