Advantage of forex compared to other trading such as stocks and binary options

Forex trading platform MT4 on Android
Forex trading platform MT4 on Android

What are the advantages of forex trading compared to other trades such as stock trading or binary options ?, Can you get rich from forex?

That is probably a question that comes to mind many people new to forex like me. These questions will definitely arise, right?

There are various reasons many people now see forex trading as a source of additional income and perhaps as the main occupation or trading for a living. 

Maybe, here are some advantages in online forex trading when compared to trading or other investments:

1. Forex trading presents two-way profit opportunities.

We carry forex trading out with a currency pair. For example, in the EUR / USD pair: a "Buy" transaction means buying Euros while selling US Dollars, while a "Sell" transaction means selling Euros while buying US Dollars.

When you expect the Euro to weaken and the USD to strengthen, traders will open "Sell" short positions. Conversely, when predicting the Euro will strengthen with a weakening USD, traders will open a trading position "Buy".

Thus, forex traders can benefit both when the currency weakens and strengthens. Even if the position loses money, you can hedge (hedging) to lock in your losses.

Hedging itself is a locking strategy, so if the price moves in the opposite direction from the prediction, the trader will immediately open a new position opposite to the original position, without closing the previous transaction.
Open Long or Short can still make a profit
Open Long or Short can still make a profit

With the correct hedging system, losses during transactions minimized or even closed.

Besides, the advantage of other forex trading is that we can do it in various currencies around the world so that there will be no end of opportunities for profit.

Although most traders only trade on seven main pairs, namely:

  • EUR / USD (Euro / US Dollar),
  • USD / JPY (US Dollar / Japanese Yen),
  • GBP / USD (British Pounds / US Dollar),
  • NZD / USD (New Zealand Dollar / US Dollar),
  • USD / CHF (US Dollar / Swiss Franc),
  • AUD / USD (Australian Dollar / US Dollar),
  • USD / CAD (US Dollar / Canadian Dollar).

2. Forex trading can do with capital and low costs.

In forex trading, there is a margin and leverage system. Where this system allows the broker to lend funds in proportion to the funds guaranteed and provided by the trader.

For example, with a leverage of 200: 1, traders only need to give a deposit for a margin of 100 USD so they can trade with a fund strength of 20,000 USD (yield of 100 multiplied by 200). Margins and leverage make forex trading does not require large capital to start it.

Previously, we might have thought the minimum capital is tens of thousands of dollars for forex trading. But not anymore. Even with a capital of 5 USD, we can already trade forex. There are even brokers that provide free capital for trading such as FBS brokers, XM brokers, AGEA brokers, and FXOpen brokers who at certain times hold promos.

Lately, more and more brokers are competing to give deposit bonuses to new traders and also provide cent/micro account facilities. Business competition between brokers makes trading commission costs traders must pay that to be lower and more competitive.

Technological advances give us the freedom to choose the forex broker with the lowest trading costs and the most sophisticated trading software facilities as our link with the forex market. Besides leverage, other factors make forex trading suitable for investors with limited capital.

3. Transaction costs are relatively low.

The fees charged by forex brokers are spreads. This spread is the difference between the bid and asks price (Bid / Ask).

In fact, spreads on the forex market also are much smaller or tighter than spreads applied to stock trading. This makes forex trading an effective investment method.

By trading via the internet, traders also have the freedom to choose a forex broker with the lowest trading costs or choose a thin spread, or can even choose a broker from the platform used. Interesting, right?

4. Traders can buy and sell.

According to data from the Bank for International Settlements, an institution that accommodates world banks, the forex market has very high liquidity (availability of funds) reaching an average of USD 5.3 trillion per day.

This makes the forex market the largest market in the world, even when compared to the famous stock exchanges in the United States.

Because of the availability of large funds in the forex market, whenever you want to sell, there will always be buyers. Vice versa, whenever you want to buy, there will always be a seller.

There is no queuing system like in stock trading which often requires the seller/buyer to wait several hours to days so that someone agrees to the price first.

5. The forex market is open 24 hours non-stop and open for 5 days a week.

Other financial markets such as stocks usually only open according to normal business hours between Monday and Friday. However, the forex market is open 24 hours a day, where only Saturdays and Sundays are closed.

As a forex trader, you will set your own trading hours. If you prefer to work in the morning because you have another main job that is not a problem, you can trade at night or vice versa.

You can trade during the day when you are busy working at night, or if you just want to specialize trading at the most profitable time, then you can see the best times and hours of forex trading which are divided into several sessions.
best session forex trading time table
Forex trading is open 24 hours which divided into several sessions

6. Lessons or material about forex is widely available for free on the internet.

Material or ebooks are widely available for free online and many brokers offer free webinars and provide free demo accounts.

Forex brokers provide trading facilities in the form of demo trading accounts. With this system, anyone can learn and practice exactly enjoy doing real trading.

How did it happen? Yes, it is clear because the funds used are virtual funds or toys, and it also provides this facility free by forex brokers. So, if you lose funds, you don't, need to exchange money, even if you win it can't disburse.

We intend this demo account for beginners who want to practice and learn first before entering the world of forex trading.

7. Anywhere we can do Forex trading.

We can now do forex transactions online, by computer, laptop, tablet or smartphone by clicking on the platform provided by the broker.

Plus the speed and cost of the internet are getting cheaper, overall the cost of being able to trade forex online is tiny and affordable.

This is the advantage of forex trading which is the most important compared to other types of trading. Then, can you get rich from forex? 

The answer depends on yourself whether you can take advantage of forex to reap dollars or not, for sure the market provides it for you to live that can take it or not.

But behind the beauty of forex, forex also has a big risk, what's the risk? Next time, let's talk about that. :)

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