www.usgfx.com ADVANTAGES OF FX TRADING
24-hour Market FX is a global market that never sleeps. It is active 24 hours a day for almost 7 days a week. Most activity takes place between the times that the New Zealand market opens on Monday, which is Sunday evening in Europe, and the US market closes on Friday evening.
Liquidity The FX market is huge and is still expanding. Daily average volume now exceeds USD 3.2 trillion. Technology has made this market accessible to almost anyone, and retail traders have flocked to FX.
Leverage FX margin ratios tend to be higher than those available in equity because it is more liquid - there is nearly always a price in FX - and it tends to be less volatile.
Narrow Spreads Spreads, the difference between the bid and offer price, in FX are minuscule. Just compare a 2-pip price in EUR/USD with a price in even the most active and liquid equity issue. Furthermore, FX prices are typically ‘good’ for far larger amounts than in equity. The spread is the hidden, ‘intrinsic’ cost of dealing, which is minimal in FX. Technology has made these tight prices available to almost everyone.
No Commission or Transaction Costs The majority of OTC FX business is commission free and, with such narrow spreads, the intrinsic cost of trading is far lower than in other assets, such as equity.
No Limit Up/Limit Down Futures markets contain certain constraints that limit the number and type of transaction that a trader can make under certain price conditions. When the price of a certain currency rises or falls beyond a certain predetermined daily level, traders are restricted from initiating new positions and are limited to liquidating existing positions only, if they so desire.
Equal Access to Market Information Despite the introduction of best execution regulations in Europe and the US, few would disagree that professional traders and analysts in the equity market have a huge competitive advantage in comparison to individual traders.
Sell Before You Buy Equity brokers offer very restrictive short-selling margin requirements to customers. This means that a customer does not possess the liquidity to be able to sell stock before he buys it. Margin-wise, a trader has exactly the same capacity when initiating a selling or buying position in the spot market. In spot trading, when you're selling one currency, you're necessarily buying another.
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