Are you looking for new investments? According to Investopedia, one option includes foreign exchange (Forex) trading, which has a daily global volume of over AUD8.5 trillion. When doing Forex trading, one option is through a Forex broker online. Since there are so many investment options to pick from, it’s critical to know some of Forex’s main benefits before deciding where to make investments. Here are some critical ones:
Benefits of Forex
Forex allows a significant amount of leverage, which can help you boost profits. For example, you can pair a small part of the full value of a currency market.
Your profits or losses will show the full value when a point is closed. Thus, it provides an opportunity to make big profits by trading on margin. It could surpass the initial deposit. Therefore, it’s important to weigh a leveraged Forex position’s total value before you trade a contract for differences (CFD).
The regular trading hours for the Australian Stock Exchange are from 10:00 AM to 4:00 PM, according to ASX. These timings differ from those of the foreign exchange market that’s open 24 hours a day and five days per week.
These hours are allowed since Forex transactions are done directly between parties and over-the-counter (OTC) rather than via a central exchange. Another critical factor is different countries are in different time zones, which provides more trading hours beside the ones Down Under.
One caveat is that the Forex market’s opening hours will vary from March to April, and from October to November due to time shifts based on daylight savings time.
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When doing FX trading, you have the chance to trade with a wide range of different currency pairs. There are various factors, including the strength of different economies (major/minor) and global events.
This benefit is one of the most critical ones of Forex. It’s not only high-liquidity but is the world’s most liquid market. This is due to the number of buyers/sellers who want to make trades during any particular time.
Banks, companies, and individuals make several trillions of AUD in trades daily. Much of the activity is done to produce a profit.
This feature can provide various benefits. For example, it means transactions are conducted fast and easily. Thus, the “spreads” (transaction costs) are frequently quite low. This can provide traders with opportunities to guess about price movements.
This is an option that not all investment options provided. It’s an important factor when investing since it affects whether you’re generally going for big/fast returns or small/gradual returns.
One of the key features of FX is short selling. The reason is a person always sells one currency to purchase another one. A Forex pair’s price is the value of a base currency’s unit. On the other hand, you can still make long-term investments in Forex if you’d like to do that option. This feature provides more flexibility in your investments.
One factor to consider is that the Forex market closes during Friday night. However, this closure is only for retail traders. Thus, your Forex broker can still make trades during the weekends. This explains why there might be a “gap” (price difference) between Friday close to Sunday open.
There are several major reasons to consider finding a Forex broker online. They include FX benefits, high liquidity, short/long-term investments, and numerous currency pairs. In a sense, you can experience the world without leaving home.