Operating 24 hours a day
The forex market effectively operates 24 hours a day. Whether it's 6pm or 6am, somewhere in the world, there are buyers and sellers who are constantly negotiating currency.
Fx market operators can always react immediately to the minute news; and gains and losses are not affected by earnings reports announced after the market closed, conference calls with analysts, falls in the level of operations due to "pending news" or announcements.
The sale of shares and US futures after the market closes brings with it several limitations. Electronic communications networks (ECN for its acronym in English), also called in English "matching systems" serve to bring together buyers and sellers - whenever possible. However, there is no guarantee that each operation will be performed, or if it will be a fair market price. Very often, traders must wait until the market opens the next day to get a smaller spread.
greater liquidity
With a volume of 50 times the negotiated New York Stock Exchange daily trading volume, there are always brokers and "dealers" (agents) willing to buy or sell currencies in the forex markets. The liquidity of the exchange market, especially the market of major currencies, helps ensure price stability. Traders can almost always open or close a position at a fair market price. This is a great advantage of the currency market.
Due to the low trading volume, investors in the stock market and other exchange-traded markets are more vulnerable to liquidity risk, resulting in a higher spread or variations sharper prices, in response to any relatively large transaction.
Leverage of 100: 1 in the forex market
Fx dealers online market offer leverage 100-1, which far exceeds the typical margin of 2: 1 offering stockbrokers and apart from 15: 1 futures market. With a leverage of 100: 1, operators deposit a margin of $ 1000 for a position of $ 100.0000, or 1%.
This considerable leverage, which undoubtedly is not for everyone, offered by companies trading in the forex market online is a powerful tool to make money. Rather than simply increase the risk, as many people mistakenly believe, leverage is essential in the currency market. This is because the percentage change in price of one currency in a day is less than 1%, while in the case of shares, they can easily have a price change of 10% in a given day.
The most effective way to manage the risk associated with operations forex trading on margin is carefully follow a disciplined trading strategy that includes regular placement of stop loss orders and limited. Design and adopt a system of forex trading where the controls take effect when emotions might otherwise take control.
Low transaction costs
It is much more efficient cost-based operations in the foreign exchange market in terms of commissions and operating expenses.
The fees charged for transactions with shares in the world of online discount brokerage generally range from $ 7.95 to $ 29.95 per transaction; while the full-service brokers typically charge $ 100 or more per transaction. An average commission of an operation futures is $ 15. Fx brokers offer market structures much lower commissions. Thus, investors operating in the foreign exchange market could limit their costs.
Same profit potential in both rising and falling markets
In every open forex position, an investor has a long position in one currency and short the other. A short position is one in which the trader sells currency before it depreciates. In this case, the investor benefits from a fall in the market price.
The ability to sell currencies without any restrictions is another distinct advantage over the stock market. In the equity markets of the United States, it is much more difficult to establish a short position due to the "Zero Uptick" rule, which states that investors can not sell short unless the last trade prior to sale off a quote or below the price at which the sale is made overdrawn. This limitation does not exist in the currency market.