Two Reasons Why Many People Participate In Forex Trading.
Carl's 2 Cents:
Even though it's commission
free, there are still trading costs in Forex
trading. Spread and interest are the two
major trading costs. Take EUR/USD as an
example: If the broker has a 3 pips
spread, a standard lot ($100,000) costs you $30.
If you long EUR/USD, you would also need to pay
interests, because USD has a higher interest
rate than EUR currently.
Forex trading is one of those great money making opportunities
everyone talks about these days. People from many walks of life,
men and women, decide to join the Forex trading world everyday
looking for the great style of life a profitable Forex trader
can achieve.
Need to know some reason why you should join the Forex trading
frenzy; here are two great reasons to join:
1): Commission-free Trading and Low Transaction Cost
When you trade FOREX you can do it totally commission-free by
choosing the right broker. These brokers are great because they
don't charge commissions to trade or to maintain an account, and
that goes for all clients trading the FOREX through them, they
don't care about your account balance or trading volume. Even
Mini FX traders, who are just starting in this field, can buy
and sell currencies online always commission-free.
And if you are worrying about trading fees you may have to pay
your broker; good news, there are none of the usual fees to
which futures and equity traders are accustomed to pay
every time; no exchange or clearing fees, no NFA or SEC fees.
Because currencies trade over-the-counter (OTC), via a global
electronic network in Forex, what you see is what you get,
allowing you to make quick decisions on your trades without
having to worry for fees that may affect your profit/loss
balance.
As you may already know, in the equities markets, you must pay
both a commission and an exchange fee. The over-the-counter
structure of the Forex market eliminates exchange and clearing
fees, which is good because this in turn lowers transaction
costs.
You may be asking yourself that if Forex brokers don't charge
commissions, then how do they manage to make any money? Like all
traded financial products, over-the-counter currency trading
involves a bid/ask spread, which represents the prices at which
you're the other party is willing to trade. Thanks to the fact
that the currency market is capable of offering you a
round-the-clock liquidity; you will receive tight, competitive
spreads both in intra-day and night trades.
2): Instantaneous Order Execution and Market Transparency.
A characteristic such as market transparency is highly desired
when participating in any trading environment. The greater the
market transparency, the more efficient the market becomes.
Unlike other markets where transparency is compromised, FOREX
markets are highly transparent.
Because of this transparency, as a Forex trader, you will be
able to exercise risk management strategies in accordance with
your level of learning and experience.
It is widely known that the Forex market offers the highest
level of market transparency out of all the financial markets
available for speculation. Because of this, order execution and
fill confirmation usually occur in just 1-2 seconds.
In the Forex world, order execution is all-electronic and
because you'll be trading via an Internet-based platform,
instantaneous execution is routine. There are no exchanges, no
traditional open outcry pits, no floor brokers, and
consequently, no delays.
So here you have two great advantages the Forex market will give
you if you decide to become a Forex trader.
About the author:
Adrian Pablo is a freelance writer with articles published in a
number of places. Get a free report on Fibonacci Trading and learn
more about the world of trading , visit the website: http://www.1-Forex.com
Written by: Adrian Pablo
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