Unlike stocks, futures or options, Forex has no central exchange or clearing house where orders are matched. The Forex market is also not limited to one location, it consists of a vast network of financial institutions, corporations and individuals throughout the world. The Forex market is the largest financial market in the world with an average daily trading volume of more than USD6 trillion. Compare that with the New York Stock Exchange, which only has an average daily trading volume of $55 billion. In fact, if you were to put the world’s equity and futures markets together, their combined trading volume would only equal a QUARTER of the Forex market.
If you’re wondering how trading the Forex market is different than trading stocks, here are a few major benefits:
a) High Liquidity
The forex market has a turnover of over USD6 trillion a day. This results in a highly liquid market whereby there are always buyers and seller in any market condition. The high liquidity and trading volume of forex allow any speculator to open or close a position with ease anytime during trading without trading limit constraint
b) 24-hour market
Forex market operates 24 hours a day, five days a week. Trade whenever you want. You can enter or exit a trade whenever you want from Sunday around 5pm EST to Friday around 4pm EST
There are no clearing fees, exchange fees, government fees and brokerage fees in the forex market. Brokers are compensated for their services based on the bid-ask spread. The retails transaction cost is typically less than 0.1% (10 pip or points) under normal market conditions.
You can trade on leverage, but this can magnify potential gains and losses.
e) Profit in both Bull and Bear market
Volatility allows traders to profit in any market condition and provides for high probability trading opportunities. It is possible for you to profit no matter which way the market is trending.
f) Ease of access
You can start trading Forex as little as USD100. Straight through order execution allows you to trade at the click of a mouse.