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There are many advantages in FOREX trading, I will talk about the advantages of FOREX trading over stock trading in a different article, but in this article I will talk about general advantages in currency trading. FOREX is a huge market and there are different ways to do trading like spot trading, futures and Options. Most people are involved in spot trading so I will focus on spot trading. In many of my previous articles I have mentioned that currency trading is a great way to make some extra income but if done without proper training you can loose a lot of money as well. If you are a beginner to FOREX trading you should check out, How to start FOREX trading for tips about choosing brokers and more free resources about trading. Now lets take a look at the advantages
No starting payment
One of the biggest advantages of FOREX and the main reason why it is popular among general public is that it is free to start. No setup fees, payment for software or monthly payments are required. The trading software is given for free by the brokers and you get some play money to start practicing. The brokers are compensated by a thing called spread for each transaction.
Markets open for 24 hours
The markets are open for 24 hours and closes only in weekend. But since the trading starts from Monday morning in Australia and closes on Friday afternoon in USA you can basically trade for around 6 days in the week. Since transactions are done online you can trade from anywhere in the world that has an Internet connection. Also because the markets are open for most of the week you can choose your time and do trading on part time basis. Keep in mind though there are time slots that offers more opportunities, so its a good idea to read up on best times for FOREX trading.
Although you are dealing through a broker you have total control of the transaction. You trade directly with the market, you start your own transactions and close when you choose to close it. This gives you a lot of freedom, which is precisely why you need to be disciplined when trading and learn to identify market trends.
Can trade with very low amounts
When you start trading for real you can start transactions for as low as 25$. I have friends who started FOREX trading for very low amounts like 50$. This low entry level is another reason why spot trading has become popular. Although you can start trading for low amounts this is not recommended because your chance of controlling risk is minimum.
What this means is you can buy and sell instantly. Since the market is so huge there is always someone looking to buy what you are selling. So you will never have the problem of not being able to close your transaction. This also means that the market fluctuates very often making it giving you ample opportunities to do some spot trading.
Better control with software
Most FOREX software given by brokers has built in functions to help you control your transaction. For example you can specify a profit taking and stop loss margins. If you enter a profit taking margin the transaction automatically closes when you reach that profit. If you enter a stop loss the transaction automatically closes when you reach that loss level. This gives you better control over your transaction helps you to trade in a disciplined way.
What leverage means is that with a small amount of your money you can control a much larger portion of the FOREX market. The amount of leverage you get depends on your broker software. If a broker is offering 1:100 leverage it means with 1$ you can control 100$ or with 100$ investment you can control 10,000$. Although this helps to make good profits it can lead to huge losses as well. So use this option carefully.
As you can see from the above mentioned points FOREX trading is a great way to make an extra income and if your successful could turn out to be huge money maker. If you are interested in FOREX trading you can check this article about etoro FOREX trading software. It is considered one of the most user friendly and beginner friendly platforms and was awarded the most innovative trading platform in 2010. click here to download etoro for free.