Trading in the forex market has many benefits as compared to the other markets. Here are a few reasons:
Retail brokers gain profit from the forex pair spread. Which means there are no exchange fees, no clearing fees, and no brokerage or government fees.
Forex allows trading directly with the market by eliminating middlemen through spot currency trading.
No fixed lot size
You are the one determining your own position size or lot in the spot forex. This opens the chance for traders with small capital investments to participate and open an account.
Low transaction costs
The bid and ask spread transaction cost under normal conditions in the market are usually 0.1%. Large transactions could cost as little as 0.7% not including your leverage.
24 hour market
Forex is the market that never sleeps. It is open 24 hours a day, suitable for day traders or part time traders as they can choose what time of the day they can trade.
The market can’t be monopolized
The forex market is so vast and with so many contributors that no single individual can control the price of the market.
Leverage in forex trading allows traders to control large positions with minimal capital investments. For instance, forex brokers can offer a leverage of 50:1, which means $50 capital investment will allow you to hold $25,000 worth of currency. But be cautious as leverages work the other way around as well, should trades move negatively against you which can lead to large loss.
The high liquidity of the forex market is due to its enormous size. Which means you can trade almost instantaneously while under normal market conditions, because someone elsewhere in the market is willing to take your trade.
You can employ as well as limit orders in your account that automatically closes your position once you reach your designated level of profit, or stop loss orders to close trades going against you.
Low barriers for entry
There are online forex brokers that offer micro and mini trading accounts for just a small account deposit of $25 making it open to individuals with no means of placing large amounts of investment right away.
Most online forex brokers offer free demo accounts to help individuals get a grasp of how forex trading goes and to gain experience as well.