Why Forex ?

dilsefx · #1 18th June 2006, 05:35 PM

Here the most important reasons why Forex is so popular today:

1.Liquidity:
Forex is the largest financial market in the world, with the equivalent of over 2 trillion changing hands daily when the volume on the worldwide stock markets is only 500 billions of dollars. Yes, an incredible figure, which is higher than all the stocks and commodities in the world combined.

2.Flexibility:
Because of 24-hour trading participants of the foreign exchange market would not wait to react on some events, as this happens on other markets (for example: stock markets). On other markets you simply can be late if you have to wait till morning to show your reaction, as in the morning the event will be already in the price, greatly differ from the desired level.

3.Lower transaction costs:
Traditionally the Forex market has no commissions, except spread, the difference between ask and bid prices.

4.Price Stability:
High liquidity helps ensure price stability, when unlimited contract size can be executes at a fair price. It helps to avoid the problem of instability, as it happens in the stock market and other exchange-traded markets because of the lower trade volume, where at one price only limited number of contracts can be executed.

5.Margin:
Margin size for trading on Forex is defined in the contract entered between a client and a bank or a brokerage company, which gives the opportunity to enter the market for the individuals and usually it is 1:100, some brokers provide an incredible margin of 1:500. So, the collateral of 1000 US dollars allows a trader to make deals on $100.000. Such high leverage combining with the rapid rates fluctuation make this market highly profitable but at the same time extremely risky.

Linus · #2 13th July 2006, 07:26 AM

Hi dilsefx,

I follow the EUR/USD pair just for academic interest.I also love fxstreet.com a lot.

Can one trade forex here in Mumbai and how ?

Regards,

Sunil Saramjame.

saigon · #3 13th July 2006, 05:23 PM

Hi Dilsefx,

Forex is one of the online trading ways. As you mention it has positive views of points. However, to win FX trade is not easy as we think.

The important thing is how to make money on this market. If it' s easy everyone could be rich in a few months trading FX. That's challenge !!! It's seemly : The more return, the more risk".

Please share your experience with everyone about this point.

BR

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