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4 Main Forex Trading Advantages over Futures
Liquidity. This is clearly one of the most important forex trading advantages. Above $5 trillion daily operations are handled in the Forex market. It makes it the most liquid market in the world. This market can absorb such quantities of volume and transactions that apparently dwarfs the capabilities of any other market. The forex market always keeps its liquidity. Positions can be liquidated and stop orders to be executed. 24 hours Market – At 2.15pm on Sundays, the sessions start at Sydney and in the Singapore markets. At 7pm ETS, the Tokyo market opens, followed by London at 2am EST. Before the New York market opens, the Sydney and Singapore markets are already open again. It is similar to a market which works 24 hours!
The reason this is one of the most important forex trading advantages, is that it allows you to react in times of fresh news. Whether favorable or unfavorable, you can act immediately. If there is an important economic release in England or in Japan, while the U.S. market is still closed, the next day might be accompanied by a major over against him. (In oppose to currency futures contracts that exist at night. However, don’t have much liquidity. So it’s difficult for the average investor in terms of accessibility).
Commission Free Trades. This is another feature among the forex trading Advantages. The best for currency trading is the one you do not have to pay commission on! Because we work directly with the market via the Internet, eliminating the costs of tickets and referring brokers fees. Yes, there is an initial cost in any transaction. However that cost is already reflected in the difference between the buy and the sell prices. Brokers make up its services by these differences, which called Spreads. But not through any other type of fees.
Price insurance. When trading Forex, there is a rapid execution of orders and the price is always fair under normal conditions. In contrast, other markets do not offer insurance or instant execution price of a trade. Despite the advantage of electronic trading and the speed guaranteed when executing an order, prices in other markets are far from being equal. The prices charged by the brokers are not necessarily the price at which the contract will be filled.
Risk limit forex trading advantages - Another aspect among the Forex trading advantages is that traders must open limited positions in order to better manage their risk. This number is relative to the amount of money in the account of each trader. The risk is minimized because the Forex market operates an on-line platform. That platform will automatically generate a warning if the required margin exceeds the equity a trader have in his account. All open positions are closed immediately in such a case. That, regardless of the size or nature of the positions. In other markets, the position is settled as a loss and the person is liable for any deficiency remaining on the account. That’s not a good thing!