Characteristics of the Forex Market
Being the world's largest financial market, the foreign exchange (or forex) market offers unmatched benefits and advantages to the prospective investor. With superior liquidity and leverage compared to stocks and futures markets, the forex market is arguably the best financial investment you can find.
What makes the forex market an excellent financial market? The characteristics that make the forex market a good one are lower trading costs, excellent transparency, superior liquidity and very strong market trends.
LOWER TRADING COSTS
Ask anyone dealing in stocks and they will tell you that they have to shell thousands of dollars to get started. Not so with the forex market. With just a few hundred dollars (often $250 or less), you can open a mini forex account and start trading!
The lower trading costs in the forex market has made it possible for even small, individual investors to make decent profits from forex trading. With lower costs, the possible losses are also much lower. You will discover that forex trading usually has no commission fees unlike in other investments. The costs of forex trading are limited to the spread or the difference between the selling and buying prices for a particular currency pair.
Transparency means the free access to trading information. Forex trading is a transparent process because the trader has full access to market data and information that are necessary to perform successful transactions. The excellent transparency of the forex market means that forex traders have more control over their investments and can decide what to do based on the information available.
In a forex market, traders are free to buy and sell currencies of their own choosing. The superior liquidity of the forex market enables traders to easily exchange currencies without affecting the prices of the currencies being traded.
So whether you trade a few thousand dollars or several millions, you can be assured of the same currency prices during the time an order was placed and then executed. The forex market's superior liquidity allows you to get the profits you expect at the time you made the trade.
STRONG MARKET TRENDS
Forex traders make money by getting accurate market data and then analyzing the direction the market takes. To do this, forex traders rely heavily on trends and trending in an attempt to predict the direction of the forex market. Most traders use technical analysis to analyze past and present forex market data and then search for trends.
Other financial markets use trends and trending but this characteristic is much stronger in the forex market. Due to strong trending, forex markets are much easier to analyze and identify possible entry and exit positions during trading.
Now you already know the characteristics that make the forex market a sound, financially-stable and profitable investment area, maybe it's time to put your money into the forex market and earn handsome profits. You can just take advantage of the forex market's positive assets and make your money work for you.
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