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Why Trade Forex?
The foreign exchange market, also referred to as the "Forex" or "FX" market, is the largest and most liquid, financial market in the world.
Three countries (UK, USA and Japan) continue to dominate the forex market. With a turnover of just under 3 trillion US dollars a day, the forex market dwarfs the London, New York and Tokyo stock exchanges combined. Forex provides several advantages when compared with traditional investments.
Below are several examples of these advantages:
Traditional Marketplace
Forex Market
Limited trading hours; trading times restricted to "local" market which decreases the attractiveness of the market for overseas investors.
The forex market is open 24 hours a day, 5 days a week. Because of the decentralised clearing of trades and overlap of major markets in Asia, London and the United States, the market remains open and liquid throughout the day and overnight.
Threat of limited liquidity, stocks are particularly vulnerable to large price fluctuations in after-hour markets or when trading smaller corporate issues.
The foreign exchange market is the most liquid market in the world eclipsing all others. In comparative terms, daily volumes are more than 40 times that of the Dow Jones Index.
Large capital requirements, high margin rates, restrictions on shorting, very little autonomy.
One consistent margin rate 24-hours a day allows forex traders to leverage their capital more efficiently.
Short selling and stop order restrictions.
No restrictions on type (market, limit or stop orders) or timing of trades.
Pattern day traders subject to restrictions requiring a substantial amount of cash on account prior to trading.
No restrictions. Very low account balances, due to leverage/margin strategy. Lower client account requirements.
