This year, the financial markets had several trends due to the rapid changes in the global economy and Covid. One of the major shifts in the market is the migration from cryptocurrencies back to Forex trading. In the last year, investors have been investing heavily in cryptocurrencies and the amount of losses has been huge. This made several investors are trying to shift their funds to the forex market.
Eventually, investors are usually wondering what are the top benefits of forex trading? and what opportunities this market offers? Forex or FX stands for foreign exchange is the largest and most actively traded market in the world, with an average daily trading volume that exceeds $6.6 trillion in 2021. Forex trading is the most basic form of buying and selling currencies.
A forex trader speculates on a currency pair expecting, either an increase or decrease in its value. Therefore, determines whether they buy or sell the pair. The market is attracting more investors every day, as it offers unique trading conditions and opportunities. Due to its high liquidity and availability around the clock for five days a week, it suits different categories of traders.
Like any investment, the forex market can be risky and unpredictable. But that’s also what makes the market attractive to many investors. The unpredictability and price volatility create trading opportunities in forex trading.
So, What Are the Top Benefits of Forex Trading?
1. The Biggest Market: High Liquidity and Trading Volumes
One of the top benefits of Forex trading is mainly the high liquidity the highest trading volumes. According to estimates, the Forex markets had a daily turnover of $6.6 trillion dollars with a total value of $2.409 quadrillion dollars in 2019.
Liquidity is how easily currencies can be bought or sold with a limited effect on their value. The 24-hour activity also makes the forex the most liquid market in the trading world. It’s incredibly difficult to manipulate or control prices. So, it keeps prices comparatively stable.
2. Accessbility: Trade Anytime and Anywhere
The forex is a decentralized market that is accessible around the clock for 5 days. Unlike other trading markets that operate during specific hours. This feature offers the traders to enter and exit positions anytime all day long. The decentralization makes the market accessible anywhere. Forex is an over-the-counter (OTC) market, meaning that trades don’t take place through a centralized exchange. All trading is done online from any device.
3. Advantage: Trading with Leverage
Leverage is a key feature of forex trading and offers traders with little capital to enter the market. It is defined as the ratio of the amount of capital to the required margin. It also gives you the ability to increase your trading capital with a relatively small deposit, the margin. It is a tool that enables investors to use borrowed funds in order to multiply their investment capacity and increase the rate of potential return. Despite leverage is applicable on different financial products such as CFDs, stocks, cryptocurrencies, it is more common in FX trading.
The leverage ratio depends on your account type and equity, up to Infinite Leverage. Existing leverage can be customized to individual trading needs. AximTrade provides a leverage range that helps you choose your preferred risk level.
4. Opportunites in each direction: Two-way Profits
The forex market provides a unique opportunity to profit from rising and falling prices. You can buy when prices are rising, or when you anticipate a higher price. On the downside, you can sell when prices are falling, or when you anticipate the lower price. And still making profits in both situations. This feature exclusively defines the FX market.
5. Embraces Different Trading Strategies
The ability to make profits by going long and short, different forex trading styles can be profitable. For example, there are different types of forex trading strategies that allow traders to use technical analysis and fundamental analysis to trade following risk management practices. There are plenty of trading styles that fit different trading levels and various goals.
6. Low-cost Trading
The top benefit of forex trading for investors is the low cost and zero commission. Unlike most online trading platforms, forex companies provide accounts for minimum costs. There is the Cent account that can start from as low as 1$ deposit. There are also accounts with a very tight spread and no commission fees.
Initially, the best forex brokers in the market tend to take care of any fees associated with trading. This means you don’t end up paying for things like transfers, deposits, withdrawals, or exchange fees. And with minimum capital, you can start trading.
7. Forex is for Everyone
Unlike other types of investments, forex trading can be suitable for everyone. Compared to other markets such as the stock market, any person can open a forex demo account, download the MetaTrader application for free, and start some basic trading. Moreover, major forex brokers provide welcome bonuses and no-deposit bonuses for beginners to start trading with a real account.
Getting started with the forex market does not cost a lot of money compared to other investments. From a modest start-up to a huge capital, forex trading is accessible to both average individuals and professional investors.
8. Advanced Trading Technology
Despite the fact that forex trading is relatively new compared to other markets, it has been quicker to keep up with technological advancements. Its decentralized nature makes connectivity vital to its existence. That’s why forex trading technologies and platforms are in constant development.
Innovations in mobile applications, trading platforms, and algorithms make it easier for individuals to trade effectively in real-time from anywhere in the world. That’s why advanced technology is a key benefit of forex trading.
9. Matuirty and Regulations
While the Bitcoin market has been driven by retail investors, the forex market is a well-established financial market with regulators and institutional investors. Maturity and regulation present opportunities for day traders to establish their investments.
The forex market is strictly regulated due to its globalized and digitized nature. This is another one of the top benefits of forex trading and works in a favor of the traders and keeps them safe from fraud. This is actually considered one of the top advantages of forex trading.
These regulations force brokers to follow strict guidelines that protect the interests of forex traders using their services. So, trading with a regulated forex broker will ensure the safety of your money, data, and transactions. A regulated broker means that its activities will be fair, transparent, and are tightly monitored.
10. Favorable Volatility
The high trading volume of currency trading each day translates to price Volatility. The forex market is influenced by external factors that include but are not limited to:
- The economic performance
- The global economy
- Political stability, events and policy changes
- Major global events and conflicts
This sometimes makes the market highly volatile, which means that there can be significant movements in currency values and, consequently, the opportunity to make more profits. This can be perceived as one of the advantages of forex trading, however, it also comes with a high risk if not handled properly. Volatility is strongly linked to liquidity, and the more liquid major currency pairs tend to be less volatile.
So, if you’re looking to take advantage of market volatility, you need to develop a good trading strategy that can overcome any potential risk.
11. Diversity of Trading: Financial Instruments
One of the top benefits of forex trading is the opportunity to trade a wide range of financial instruments including currency pairs. The forex market is comprised of 170 different currencies. Initially, USD is on one side of 88% of all forex trades. Eventually, spot forex is the highest asset class with almost $2 trillion daily value in foreign exchange markets. After spot fx, the instruments with the largest daily turnover are:
- Foreign Exchange Swaps $3.2 trillion
- Forwards $1 trillion
- Currency Swaps $108 billion
- Options and others $294 billion
You can speculate on any currency and make use of the global events and economic situations all over the world.
With AximTrade, for example, you can trade on major and cross currency pairs. It also offers you the option to trade cryptocurrencies, commodities, and indices as well.
How can I start Forex Trading?
A good way to start trading forex is by educating yourself about the basics of the market. Check our detailed guide for beginners to Learn Forex trading. After getting a sufficient forex education and being comfortable with the basics, you can choose to trade directly on a live forex account or open a demo account to safely explore the market.
In financial markets, learning the basics of fundamental analysis is the key to predict the market movements and setting the strategy for your investment. The main benefit of fundamental analysis is to determine the key factors which affect the currency pairs or gold and other financial instruments.
If you are searching for the best platform and best forex broker with reliable trading conditions and tight spread, AximTrade provides the most competitive trading conditions with advanced execution technology. Choose now from various forex account types, based on your trading strategy, experience, and capital designed for investment.
How to start Forex trading?
- Choose a reliable forex broker with best trading conditions and secure platform.
- Open forex account to start trading now or practice risk-free with virtual funds on our demo account.
- Download MT4 trading platform, and sign in using your trading account. Make sure you protect your passwords and trading accounts.
- Educate yourself about the forex market and learn more about trading conditions, indicators, controling your mindset, setting a trading plan and exploring different trading strategies and set one for yourself.
- Follow a strict risk management plan that involves using stop-loss orders in order to protect your capital.