Advantages of the Forex

Since 2002, the Forex has become more accessible and the part of the transactions done by private individuals is constantly increasing.

In fact, this market has real advantages in comparison with the share or futures markets.

A 24h/24 open market : In reality, the Forex market never closes but its activity sharply decreases from Friday evening at 22h00 to Sunday evening at 23h00. Most of the platforms are not available during this period. So we can say that the Forex is available 24h/24 from Sunday evening at 23h00 (it depends on the bronkers) to Friday evening between 22h00 and 23h00.

No gap : Except the week end closing, the Forex is never closed so there is no gap like when the share markets open. So it is easier to deal with risks. The market won’t make gap that can provoke capital loss on share markets in case of important events during the markets closing.

Guaranteed stops : A part of the brokers proposes guaranteed stops on the Forex. Like on the share markets, gaps can happen so stops can’t be guaranteed.

Accessibility : Most of the Forex brokers have very low entry level prices; this enables everybody to speculate. On shares, costs are important, so it will be difficult to win money beginning with too low amounts.  On futures, because of the volatility, of the leverage and of the contracts prices, it will be hard to work with less than $25 000.

Liquidity : With about $3400 billion exchanged each day in 2007, the Forex market is really liquid. This liquidity creates a very small spread and allows entering or getting out positions without difficulties and so until very important amounts.

Few costs : Most of the brokers propose costs limited to the payment of the spread. In general, there are neither account administration charges nor sage deposit charges or commisions whereas it exists for shares. Moreover, most of the Forex brokers propose platforms that include graphic; news flow and the orders passage interface; this don’t correspond the futures and shares case that generate additional costs.

An important leverage : On the Forex, the maximum authorized leverage fluctuates between 50 and 400 according to the account size and the brokers. The leverage can be wrenching, but well used,  it can also be at the origin of great achievements on the Forex. On share markets, leverage is limited to 5 and on futures it is often limited to 20-30.

A symmetrical market : On the Forex, we work the same way and with the same costs whether it is bullish or bearish. There is no additional cost like daily commission or prolongation costs that you must pay when you work shares with DSS (Deferred Settlement Service).

A not very impressionable market : The Forex is not very impressionable because of the daily transactions volume. Strategic movements can happen at short-term but they will have a reduced extent. On share markets, insider offenses are common and analysts’ publications can sometimes have a great influence on rates. ON the Forex, a private individual can be at the same level as a trader who works in a front office whereas ity is more difficult on share to compete with traders who can often access inside information.

Diversification : The Fore is now a full assets class, thats enables to widen the range of shares that makes up the portfolio. A well done diversification reduces the risk exposure.