Pros And Cons Of Foreign Exchange Market Trading

Posted by icmarkets on September 20th, 2014

The Forex market is open 24 hours a day, 5 days a week, making it the most traded and most liquid financial market in the world. A lot of traders are attracted to this market because here, it is as easy and fast to get into a trade as it is to get out of one. The key is finding the right market to trade in. The Forex trade is also one of the most versatile because traders have 28 major pairs with eight major currencies to choose from. Those who are only beginning to venture into the Forex market are advised to start and stick with major currencies that everyone knows like Euro and dollar pairs, instead of experimenting with pairs that have no liquidity and very little information like trading the Iraq dinar versus the Indian rupee.

You should make many great considerations before entering the Forex trade. Like any other market, the foreign exchange market has its benefits and risks. One of the greatest benefits of currency trading is high leverage. Compared to other markets, for instance the Stock market where a trader can only purchase securities on a 2 to 1 leverage margin, you are allowed up to 500 to 1 or even 1000 to 1 leverage on the Forex market. This means you control $50 worth of currency for every dollar you invest. Trading currencies can also be a low-cost and efficient way to make profits, especially for a talented trader who knows how to maximize trading opportunities. It the currency trade is also very ideal for short-term investors because it is a fast market that has super-tight spreads and no commissions. Forex brokers don't charge commissions. They make their money off of spreads between the traded currencies.

Forex trading, however, is not without risks. Currency trading is not as transparent as other markets, because traders will often be trading against pros and those with control over when and where the orders get filled. This is why it is important to find a trustworthy broker to work with while you do the trade. According to experts, the most common reason why traders fail in the Forex market trade is that people tend to trade too large and/or too inconsistently. This is a great downfall because good analysis of the market is not enough to succeed in Forex. Traders also need to learn how to manage their money well.

About IC Markets
Headquartered in Sydney, International Capital Markets Pty Ltd is a provider of online forex trading services, offering individual traders, money managers and institutional customers proprietary technology, tools and education to trade online. IC Markets has distinguished itself among industry leaders with its unique True ECN forex technology, proprietary tools and services, and remarkable focus on customer service. IC Markets is regulated by the Australian Securities and Investments Commission in Australia.