If you are interested in currency trading, then you must be on your toes 24/7. Even if the market is closed in your country, it might be open in a part of the world. Therefore, you may be sleeping but the market will still be working somewhere. That is, trading in the currency is a very painful and daunting task. Then why do traders deal in this segment? The reason is that the chances of earning profits are superb in currency trading. There are various benefits or advantages that come from trading in currency. These benefits are as follows:
- Absence of middlemen – Currency trading is done in the spot market. The element of spot currency trading eliminates the requirement of middlemen and therefore, it allows the trader to directly deal in the market. Elimination of middlemen also suggests that you will not be required to pay any sales commission on your currency trading transactions.
- There is no fixed lot size – In spot forex, there is no fixed lot size. That is, you will determine your own lot size as per your own requirements. This allows the participants to trade even with the smallest lot size.
- Low transaction costs – The bid or ask spread is less than 0.1% from the normal market conditions. For large dealers, the spread would go as low as 0.07%. This low transaction cost is an advantage to the trader.
- You can trade at any time of the day – A trader does not have to wait for the market to open. He can trade from the beginning of Monday morning in Australia to the afternoon market close in New York. That is, you can easily decide the timing of your trade transaction – morning, afternoon or night.
- No monopoly on the market – The forex market is so huge that it is practically impossible for any one entity to control the affairs or prices or direction of the market for a long period of time.
- Trading on margin – Even with a small amount, a trader can control a larger total contract value. That is, even with a small capital and a low level of risk, a trader can get the opportunity of earning huge profits.
- High liquidity – Since the market is open round the clock and the market size is very huge, liquidity is never a problem in the currency trading, that is the forex market is extremely liquid. This means that even with a click of mouse, you can buy or sell at your own discretion at any point of time in the weekdays and you will get an instantaneous response.
- Less entry barriers – There are very few barriers to enter the market and start trading in it. Though the bare minimum accounts are not encouraged, but at the same time, huge capital is also not required to do forex trading.
If you look at the above mentioned benefits, then you will realize that the person who has knowledge of currency market will definitely love to take the pains so as to book good amount of profits.