Advantages of Trading in Forex

The world's largest financial market

As mentioned earlier, the FX Market is by far the worlds largest. With over 2 trillion dollars being traded daily there are several distinct advantages brought forward to the investor.

The first are the hours. The FX market never closes, and because of the huge volumes the market always has plenty of liquidity within it so that any investor knows that when he wants to enter or exit a trade, it will always be possible.

24-hour 5-day a week market

The FX Market is always open. On Monday morning trading starts in Sydney, Australia and as the day goes on more financial markets join in; through Asia – Hong Kong, Singapore and Tokyo - then through to the Middle East, Europe and finally the Americas. The most liquid hour of trading occurs in the European mornings when the U.S has joined in and Europe and the Middle East are still trading.

When the U.S starts to close, Australasia begins again and the process goes on 24-hours a day until the markets close at 5pm New York time on Friday.

The totally global FX market allows investors to trade at any time and never be caught out, in the event of a world event or an economic announcement without the ability to trade. This is truly unique to the FX market.

What is the location of the FX Market?

The FX market is considered to be an Over the Counter (OTC) or "inter-bank" market, since transactions are conducted directly between two counterparts either over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.

The world's most liquid financial market

The liquidity in the market also gives the investor the confidence of knowing that the FX market will always behave the same, day or night, anywhere in the world – unlike other financial markets that either close their doors for trading or widen up the spreads due to the illiquid time of day, simply because there are not enough players in the market.

Streaming Rates

Through the LiderTrader platform, traders are able to view on-line, real-time, executable foreign exchange spot rates on streaming prices.The rates rates are generated by Lider's liquidity providers who are the world's major international banks and leaders in foreign exchange. The rates seen on the LiderTrader platform are Lider's rates as a market maker and reflect the world wide flow of FX supply and demand.

The world's most transparent market

In other financial markets, large players have been known to move a particular share or commodity in order to profit. Because of the vast volumes in the FX markets it is almost impossible for even the largest groups to interfere with the general market forces.

Zero Costs

There are zero costs for trading in foreign exchange with Lider Forex. No costs for trading, no commissions, no hidden fees, or brokerage charges – in fact no costs at all. Lider Forex earns its income through the difference between the buy and sell prices.

When comparing the FX Market to other financial markets, the savvy investor immediately realizes the difference. In the equity markets, for instance, investors pay anywhere from $7 to $30 per trade, via on-line discount brokers. When using full-service brokers this can often be $100 per trade.

When comparing the futures market, trading commissions, exchange fees and clearing fees are all part of the package.

For every investor cost is a serious issue, and when you compare the world's main financial markets in terms of cost, the FX Market is clearly head and shoulders above the rest.

Spreads

Another cost to trading is the spread between the buy and sell price. With Lider Forex offers the tightest spreads are offered - 3-4 pips on major currency crosses. This represents a cost of 0.025% which is or one-quarter of one per mile, or one-twenty-fifth of one-percent.

In the equity markets, for example, a standard spread is often 0.125%. That’s five times the spread in the foreign exchange market, not including the added transaction costs mentioned above.

If looking at the futures markets the situation isn't much better. When comparing like traded instruments for example the EUR/USD contract for example, we find the spreads available with Lider Forex are 40% less than those available in the futures market. Once again that is without taking into account the added fees charged when trading futures.

Accessibility

In order to start live trading with Lider Forex, an investor can open up a trading account for as little as $100. That barely pays for the opening commission in the other financial markets. The high degree of leverage that is obtainable in the trading of off-exchange foreign currency transactions can work against you as well as for you. Leverage can lead to large losses as well as gains.

No Restrictions

When trading with Lider Forex, clients can trade amounts as small as 5,000 units of the base currency and in integral sizes thereof. When comparing similar instruments in the Futures markets the amount is 125,000 units and integral sizes thereof. Your entry to trading is much easier with Lider Forex.

Leverage

With Lider Forex, investors can trade with leveraged amounts up to 200 times their current equity value or 200:1. This dwarfs what is normally offered in the equity markets, being 2:1 (100 times as much). The futures markets margins vary greatly from one instrument to another but do not often fall below 10:1 (20 times as much).

Currency crosses generally fluctuate a lot less than equities or futures and so leverage is essential to successful investment in the FX market. The investor should use the tools available to him within Lider Forex's platform, such as limit and stop-loss orders. Combining these orders with correct money management is also important to successful trading.

The high degree of leverage that is obtainable in the trading of off-exchange foreign currency transactions can work against you as well as for you. Leverage can lead to large losses as well as gains.

Shorting – Profit with both Rising and Falling Markets

In various financial markets throughout the world, there are many limitations against the possibility of shorting certain instruments. In the FX market, whenever you enter a trade you are immediately long (bought) one currency and short (sold) another. Therefore the opportunities to go long or short are the same and the opportunities to profit are endless.
In general terms you are considered long if you bought the major currency and short if you sold the major currency.