Eight reasons to trade forex
1. Great for short-term opportunities
As the forex market is so vast, it’s constantly offering new opportunities. In fact, most forex trades are held for just a few hours or days.
2. It’s open 24/5
FX markets are open from 5PM EST Sunday to 5PM EST Friday. This is because the different time zones of the forex trading centers (London, New York, Sydney, and Tokyo) mean that at least one is always open (when New York closes, Sydney opens).
3. Unmatched Liquidity
With daily turnover reaching $7.5 trillion,* forex is the most liquid market in the world. This liquidity often results in more actionable prices and unlike other financial markets, traders can respond almost immediately to currency fluctuations, whenever they occur – 24 hours a day, 5 days a week between Sunday 5PM and Friday 5PM.
4. A range of different markets
5. No commissions
There are no commission fees when you trade forex with a standard account. As your broker, FOREX.com is compensated by the spread (the difference between the buy and sell price), and forex markets usually have some of the tightest spreads of any asset class.
6. Take long or short positions
You can buy and sell forex pairs. This means you can take advantage of both rising and falling markets.
7. Low risk of manipulation
Because the forex market is so vast, it’s almost impossible for any single actor to exploit it in any significant way.
Leverage lowers the cost barriers to trade forex. It enables you to put up a fraction of the deposit to access a much larger trade size. Leverage can magnify your profits, but it can also magnify your losses. This is a critical trading concept to understand.
What affects the forex markets?
There’s a reason why forex traders are constantly analyzing the news. Forex is influenced by a plethora of factors, both economic and political, putting the rates constantly in flux.
Economic data gives an indication of the health of an economy and therefore the national currency. Unemployment data, government debt, inflation, and interest rates are all figures that forex traders should have on their radar.
Major events such as elections, trade deals, conflicts, environmental disasters, and pandemics can all have a profound effect on a currency. Even more minor events such as cabinet reshuffles or small policy changes can also have an impact.
Supply and demand
Supply-and-demand is one of the biggest factors that influences the forex market. If there’s a sudden spike in demand for euros, it reduces supply, and the price will consequently rise.
Hungry to know more? Read How to trade forex.