Advantages of the Forex

No commission and brokerage :

Unlike the share markets, the investors on the Forex do not pay commissions; they also do not pay for a safe deposit charge, a purchasing cost, a selling cost, or fees for account management.

 

Marked tendency :

The exchange market is a marked trend market. In fact, the exchange rates rarely remain for a long period of time in a range, which is to say in a lateral canal. The investor can have gain opportunities as well in a bullish tendency as in a bearish tendency.

 

The advantages to deal with :

The Forex brokers make rules over trading platforms which enable them to make instantaneous transactions or not on the exchange market. In general, the Forex brokers also make over several trading platforms and sometimes offer the opportunity to access one’s trading account via mobile, pda….

Most of the Forex brokers enable the investors to pass an order by phone without charges, but in general it is not authorized to pass orders by phone for the mini accounts. Inquire about these modalities; they can save you in case of internet cut.

 

Low transaction costs :

The only transaction costs on the Forex correspond to the spread bid-ask (difference between the selling price and the purchasing price). An example with a 3 pip spread.

 

 

Purchase of 10000 at 1.3553

€100000  = $ 1 00000 each pip = 1$/pip

The transaction costs amount to 3 pips (the spread), so 3*$1 = $ 3 for a € 100000 position.

 

Purchase of 10000 at 1.3553

€100000  = $ 10 0000 each pip = 10$/pip

The transaction costs amount to 3 pips (the spread), so 3*$10 = $30 for a € 100000 position.

In general here are the only costs received by the Forex brokers.

 

A lot of facilities

The Forex enables one to easily use leverage, and without cost contrary to the Deferred Settlement Service (DSS) on the share markets. The Forex also enables one to take short positions on the Forex, or short sale on the share markets. This shorter possibility is available for the exchange rates, unlike the share market where only certain share are eligible for the DSS. The short positions on the exchange market don’t imply extra-costs unlike the share market. On the Forex, the investor is always the seller and buyer at the same time. We can imagine a purchasing position on the EUR/USD, so the investor is long euro and short dollar.

 

The biggest financial market in the world :

The exchange market is the biggest worldwide financial market, the most liquid in the world… More than $3200 billion are exchanged each day on the Forex, as a comparison, only $25 billion are exchanged each day on the share market in the entire world. Moreover, the volumes increase each year.

This huge volume enables to assure a constant liquidity for the spot operations. The great liquidity of the market enables to prevent a possible exchange rate manipulation. Even if the central banks have no real influence on the exchange rates.

 

A low volatility :

The exchange market is a low volatility market. In fact, we see that the medium daily variation on the EUR/USD doesn’t exceed 1%.

The Forex is wrongly considered as a volatile market, but in reality it offers a low volatility. A lot of investors wrongly think that it is a highly volatile and dangerous market because the gains or loss can quickly be important. But the importance of the gains and loss are the result of the importance of the leverage allowed by the brokers. The leverage is only responsible for this reputation.

It is easy to notice that each investor chooses the size of his position and therefore totally controls the risks… The money management is a fundamental and vital tool, to invest on the markets…

 

Information easily accessible :

The exchange rates are impacted by several variables like the statistics regularly issued on the economies (employment figures, real estate, inflation..), the States’ decisions, the Central banks governors (on each country legislation, on the key interest rates…)…

All this information is easily accessible thanks to the brokers, to the Internet Medias; to the written press….and enables you to be clearly informed about the States’ economic and financial health.

 

A continuous market :

The exchange market is a market that continuously works from Sunday 23:00 to Friday 22:00. So each investor can make transactions 24h/24, 5days/7. This schedule enables private investors who don’t have time like the trader during the day to take opportunities in the evening, the night or early in the morning.