The number of forex traders are increasing day by day to its lucrative profit potential. But trading the financial instrument in the live market involves huge risk. There are many traders in this industry who have lost their hard earned money in the forex market due their lack of trading skills and discipline. The number of successful traders in this area is very less compared to any other business. Statistically speaking only 5 % of the traders are making consistent profit in this market and the rest 95% are losing money. So why we should be trading the forex market where the success rate is only 5 %? The answer is pretty simple. Once you master the art of forex trading there is no limit to your potential earnings. You will always earn a decent amount in contrast to your initial deposit. It’s always better to know the pros and cons of certain business when you want to take it as a full-time profession. In this article we will talk about the key benefits of forex trading.
When you trade the financial instrument you buy or sell certain assets at a specified price. If the market moves in favor of you then you make profit or else you end up with loss. The total cost of performing this function is zero since most of the brokers compensate the trading cost with a term called spread. That is if you buy the EURUSD pair at 1.0625 price and close the trade at 1.0650 level then you profit was supposed to be 25 points or pips. But broker will take one or two pips profit money as their service charge. Basically these small amount is nothing compared to the service they are providing to their retail traders.
Cut your middle man
Almost every business in the world requires a middleman to carry out all the business function properly. But unlike other business in forex you will have no middle man. You will be directly trading the financial instrument in the market. No one will be able to manipulate the price feed since it’s an international market where manipulation is impossible even by large companies or banks
No fixed lot size
In the forex market you can vary your profit by changing the lot size of your each single trade. If you trade with higher lot size then you will be making more money for every single pips move in the market. Similarly, when you are trading with smaller lot size your potential profit will be less along with your potential risk. But as professional traders you must take your trade with reasonable lot size since this will reduce your risk to a great extent in the financial market.
Low transaction cost
When you trade the forex market you don’t need to worry about your transaction cost. Almost every business in this world spends huge amount of money in their transaction but when it comes to forex trading you can easily move your fund in and out with a very low transaction cost. Even there are many broker who provides premium trading services to their client with 1 to 0.7% transaction fee. To be precise you can consider it as a business where no transaction cost is required.
24 hour market.
Trading can be done from different parts of the world. As a forex trader you have the freedom to execute your trading order 24 hours a day. The market generally opens in Mondays morning or to be precise it opens in Australian’s trading session. Once it opens it gives flawless opportunity to the trades to make an immense profit from the fluctuating rates of the currency pairs. The trading hours closes the Friday’s New York trading session. In other words forex market can be replaced with the word 24 hours market for the traders.
There is no business in the world where manipulation is absent. But when it comes to forex trading it’s true that no once will be able to manipulate the live feed of the market. The forex market is so huge that even the mighty president of the United States or Central bank can manipulate the price feed. To be precise you will be monitoring one country’s economic performance compared to another country. So there no question that the economic performance of a single country will get manipulated for a certain period of time.
Leverage is one of the key factors that drives normal people to become a trader. Leverage can extremely useful if trades are executed with proper risk management factors but in the hands of novice trader leverage is nothing but a deadly weapon. Leverage offers the trader to take control of huge amount money in the market without getting invested heavily. For instance, if you are using 1:100 leverage then you are basically trading with 100 times of your initial trading deposit. To make things clear let’s say that you have $1000 capital in your trading account. So if you are using 1:100 leverage, you will be able to open contracts which is as big as 1000 x leverage=100000, pretty huge amount for the traders.
The forex market is huge market where trillions of dollars are traded in every single day. This large amount of transaction makes the forex market extremely liquid. Due to this extreme liquidity, all the currency pair in the financial market moves to a great extent in a single day which created favorable trading conditions for the traders. In the eyes of trained professional this unique features of the forex market makes it so popular in the finance world.