In this article, we will analyze the main advantages of operations with Forex, the foreign exchange market, compared to operations with futures: Liquidity Several trillion dollars move daily in the foreign exchange market, which makes it the most liquid financial market of the world. This market can accommodate such volumes of volumes and transactions that make the skills of another market dwarf. The currency market always maintains its liquidity, important positions can be liquidated and stopped with the execution of orders without commitment, except that the market, of course, is exposed to very volatile conditions. 24 hour market. On Sunday at 2:15 p.m., merchants begin trading in the markets of Sydney and Singapore. The Tokyo market opens at 7 pm ETS, followed by the London market at 2 am. Before the New York market opens, the Sydney and Singapore markets have already reopened, it’s similar to a 24-hour market! As a forex trader, you can instantly hear the news, whether cheap or unfavorable. If there is important news from England or Japan while the US market is still closed, there could be a major change the next day. (During the night, the markets that operate in future currency contracts exist, but the operators do not have much liquidity and it is difficult for the retail investor to access them)
Operation without commission Do you know what is good about currency trading? You do not have to pay commissions! Since it works directly with the market through the Internet, costs for intermediaries are eliminated. Yes, any transaction you open incurs an acquisition cost. However, these costs are reflected in the difference between the purchase and sale price (called differential) and are also included in the forward transaction. Online brokers compensate for this difference between the purchase and sale price instead of commissions (with the exception of some ECN brokers, which offer a very small difference when applying a volume commission). Safe price In currency trading, orders are executed quickly and the price is maintained while the market is in normal conditions. On the contrary, other markets do not offer a safe price or the immediate execution of an operation. In spite of the
With the advantages of electronic processes and the guaranteed speed of execution of a contract, prices in other markets are far from equal. The prices calculated by the brokers represent the last operation, not necessarily the price at which the contract is executed.
Guaranteed risk limit Operators must open positions by establishing a loss limit to better manage the level of risk. In addition, the total risk in relation to the amount of money is in each merchant’s account. The risk is minimized in the currency market, since the functions of an online trading platform automatically activate an alert when the required margin exceeds the operator’s capital in your account. All open positions will be closed immediately, regardless of the size or nature of the positions held in the account. In other markets, the position is liquidated as a loss and the person is responsible for all debts that remain in the account. That’s not good