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Of the many things to trade, what is there about currencies that are so special? Why do people trade foreign currencies? For someone who doesn’t know much about Forex trading, you might be surprised that there are several benefits and advantages of going into the world of Forex. Who knows, you might get curious and want to start trading currencies yourself? Read below to know about these benefits today.
1. There are no commissions in trading foreign currencies. You don’t have to worry about brokerage fees. Brokers are compensated through the bid-ask spread. So you don’t have to pay them fees if you are simply trading foreign currencies. There are also no government fees. There are no clearing and exchange fees as well. There are no middlemen involved so that means no fees in between. Spot currency trading has eliminated the need for middlemen. It has provided traders a way to directly do foreign currency trading directly with the market responsible for that certain pair of currency.
2. Another good thing about trading foreign currencies is elimination of lot size. In trading foreign currencies, there is no fixed lot size. In other financial markets such as in future markets, the exchanges determine the size of the lot or contract. In trading foreign currencies however, there is no size. You can determine your own lot size when you get into spot Forex. This means that you can trade as low as $250 to as high as you want.
3. Another good thing about Forex trade is the very low transaction costs. This is where your brokers get paid. The normal retail transaction cost, also known as the bid or ask spread, is usually less than 0.1 percent. But on the other hand, it can go as low as .07 percent for the larger deals. The percentage will all depend on your leverage.
4. Who can top off a 24-hour market? Yes, that’s one of the advantages of trading foreign currencies. You don’t have to wait for the opening bell. It’s open 24/7. You can trade whenever you want to, whether morning, afternoon, or night!
5. Another great thing about trading foreign currencies is that no one can control the market price. The Foreign Exchange market is so huge. There are so many participants. Thus, no one can actually corner the market for a long period of time.
6. Another benefit of foreign currency trading is that they allow for mini and macro trading. You can deposit as low as $300 or even less. This gives more flexibility for those who don’t have much capital to start up with trading.
David is free lancer writer and content builder of many finance sites and magazines. He writes many articles on many finance related topics but currently he writes on foreign currency trading, how it converts country wise, what type of loss or profit we get in foreign currency trading.