There Are Many Advantages of Trading Forex.
Here are just a few reasons why so many people are choosing this market:
No clearing fees, no exchange fees, no brokerage fees. GMT Markets is compensated for their services through something called the “bid/ask spread”.
Low transaction costs
The retail transaction cost (the bid/ask spread) for GMT Markets is from a minimum of 1 pip, which means if you open a position of AUD/USD with a lot size of 100k, the cost is only 1 dollar AUD.
A 24-hour market
There is no waiting for the opening bell. From the Monday morning opening in Australia to the Saturday Morning (Friday Afternoon in New York time) close in New York, the forex market never sleeps.
This is awesome for those who want to trade on a part-time basis because you can choose when you want to trade: morning, noon, night, during breakfast or in your sleep.
No one can corner the market
The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank or the mighty Chuck Norris himself) can control market price for an extended period of time.
In forex trading, the definition of leverage is described as ‘borrowed funds’ in other words ‘the margin’ this allows Forex traders to access larger sums of capital, while this can increase profits and losses (double-edged sword). Without proper risk management, this high degree of leverage can lead to large losses as well.
An example of leverage: GMT Markets may offer 200:1 leverage, which means that a $500 dollar margin deposit would enable a trader to buy or sell $100,000 worth of currencies.
Because the forex market is so enormous, it is also extremely liquid. This is an advantage because it means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will as there will usually be someone in the market willing to take the other side of your trade.
You are never “stuck” in a trade. You can even set your online trading platform to automatically close your position once your desired profit level (a limit order) has been reached and/or close a trade if a trade is going against you (a stop loss order).
Low Barriers to Entry
You would think that getting started as a currency trader would cost a ton of money. The fact is, when compared to trading stocks, options or futures, it doesn’t. GMT Markets offers “mini” trading accounts, with a minimum account deposit of $500.
We’re not saying you should open an account with the bare minimum, but it does make forex trading much more accessible to the average individual who doesn’t have a lot of start-up trading capital.