Last Updated: January 20, 2022
Are you a stock trader and want to try to trade in the Forex market? If you are then you are on the right path as it serves as diversification of your assets. But what is the advantages of Forex market could offer you. Well, most people would say more money than the stock market. While it is true, before that you have to consider your risk appetites and what makes the Forex market appealing to you. Below are the advantages of the Forex market.
Forex Market Could Not Be Monopolized by Its Participants
Now, you might be thinking why it could not be monopolized. Well, according to Dicks (2010, p. 3), the Forex market is the most liquid financial market due to its high day-to-day transactions. The transactions of the Forex market could reach reached $6.6 trillion in April (Triennial Central Bank Survey, 2019). This means that anyone who would want to try to manipulate must have spent nearly that $6.6 trillion a day. So, yeah, logically any participant has a slim chance of manipulating the Forex market.
Forex Market is Operating 24/5 from Monday to Friday
Dicks (2010, p. 3-4) explained that Forex trading is conducted through electronic networks that connect all participants of the Forex market around the world, which would allow them to trade 24 hours for five days or to simplify it 24/5. This flexible time to trade in the Forex market makes this market really appealing to anyone who wants to become a full-time trader, part-time trader, or just learn the behavior of the Forex market.
Low Margin Requirements
In the book that had been written by Dicks (2010, p. 4), he explained that Forex has leverage which allows the participants to trade with low margin where this allows you to trade currencies without having those currencies first. This is useful, especially if you only have a small amount of cold money to be spent on trading in the Forex market.
Conclusion
The forex market has advantages to offer whether it is for seasoned traders or new traders in the Forex market where it offers free competition to any of its participants, flexible time to trade, and you could trade with a small amount of money by using leverage.
Written by Andre I.
References
Dicks, James. 2010. Forex Trading Secrets: Trading Strategies for the Forex Market. New York: McGraw Hill.
Triennial Central Bank Survey. 2019. Foreign exchange turnover in April 2019. Retrieved from BIS. (Accessed 26 December 2021): https://www.bis.org/statistics/rpfx19_fx.htm