3 reasons why Forex is the Most Advantageous Financial Market
When it comes to appraising the popular and unique forex market, your opinion will be shaped almost entirely by your appetite for risk. While risk-averse investors can scarcely see beyond the high levels of volatility and excessively long trading sessions, for example, those in the market for higher returns are more likely to embrace the leverage and liquidity that defines the foreign exchange. With the Bank for International Settlements reporting that forex trading generates in excess of $5.3 trillion a day, however, it would appear as though the majority of investors are willing to take a calculated risk in the quest for larger returns.
3 Reasons why Forex is the Most Advantageous financial Market
The reason for this is that the forex market remains arguably the single most advantageous financial market in the world, and here are just some of the reasons why: –
The Low Cost of Forex Trading
Debt comes in many forms, and all of these variations have a tangible influence on traders and investors from around the world. From nation debt (which in the UK continues to grow at a rate of £5,170 per second) to consumer liabilities, this reduces disposable income and often forces investors to seek out low-cost trading vehicles. Fortunately, forex trading is one of the most inexpensive methods of investing your money, with a far tighter spread than those applied to securities, stocks and commodities. This creates an accessible market where future profits can be easily maximised.
Benefit from Marginal Returns
In forex trading, you are speculating on the performance of one currency in comparison with another. This type of trading is margin-based, which means that it is possible to earn far more than your initial investment and drive huge returns. While the reverse is also true (in so much that you can lose far more than you originally committed to the cause), this is where the delicate balance between risk and reward must be given careful consideration by investors. The potential gains are certainly huge, however, while traders are also helped by the presence of expert brokerage firms and the type of resources.
Profit in a Depreciating Market
Another advantageous aspect of margin-based investments is that they relieve traders from the burden of ownership, while also enabling them to profit even in a depreciating market. Simply by taking a short-position in the market as and when rates decline, you can optimise the margin in a specific currency pair and drive huge, short-term gains. Conversely, you can assume a long position when rates begin to rise, before selling currency at a later date for more than you initially paid. This type of flexibility is unique to the forex market, and it represents the core difference of trading derivatives and fixed assets.