Currency Exchange Market – Why Is It So Popular?
June 29th, 2009
Trading in Forex market is becoming more and more popular.Wherever you go you see the advertisement of Forex brokers. So what makes it so attractive for people and successful for brokers? You probably already know that Foreign exchange is the largest market. No wonder it’s so big, since in Forex money is being exchanged for money. Here is the list of things that makes it so attractive to people who want to try trading in Forex.And why you need to educate yourself in Forex trading
Promise of High Profitability
The first attractive feature of this market is of course the high leverage. Leverage makes it possible for brokers to attract everyday people like you and me to open trading account with small funds. This is what makes it so unique. For example stock or futures market do not have such big leverages.
You can get leverage up to 100 or 200 from your broker. That means you can invest only 1/100 of the whole amount you want to trade. Therefore it gives the potential to make high returns on investments. However the opposite side of higher leverage is the risk of loosing your money becomes also very high.
Large Daily Volume of Money Exchanged in Forex
I told you before that Forex has the biggest exchange volume among all financial markets. Do you know that average daily volume approaches $4 trillion. Forex traders like you and me take only tiny part of that volume. The most of it is being exchange by big participants like banks and othe financial institutions that mostly located in Tokyo, London and New York.
Quick Execution of Trades
If you tried trading Forex even on a demo account you saw that orders are executed instantly. That’s called liquidity. There always will be an order that is opposite to yours to get them executed quickly.
Currency of Different Countries
One more thing that separates Forex form most of the other exchange markets is that it is a worldwide market. Currencies of many countries are involved in Forex. Of course there are some currencies that are used more than others. For example US dollar, Japanese Yen and British pound are used more by traders than other currencies.
Continuously Open Around the Week
Since it is a global market the time when currencies are traded travels with the Sun from one country to another. That makes Forex open 24 hours a day. It closes only on weekends. Therefore you can choose your own time to trade. Also you can chose the time of volatility that you prefer. New York session is highly volatile and unpredictable for USD crosses. London session is also volatile but more predictable. And Asian session goes with much less volatility for US dollar pairs.
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