Wednesday, July 1, 2009

Currency Exchange Market – Why Is It So Popular?

Trading currencies in Forex is becoming more and more popular.We all know that Forex market is one of the largest markets. This fact alone makes it so attractive to many people to join trading currencies. The same fact makes brokers to advertise it everywhere to attract more and more clients. There are number of other reasons why people come to Forex.And why you need to learn to trade Forex.
High Return on Investment

The first attractive feature of this market is of course the high leverage. Leverage makes it possible for brokers to attract everyday people like you and me to open trading account with small funds. This is what makes it so unique. For example stock or futures market do not have such big leverages.
People who open their accounts with retail brokers trade currencies with leverage. Leverage of 100 or even 200 is what normally offered by most brokers. Depositing only small amount of money into your trading account allows you to control lot sizes 100 or even 200 times larger than your investment.

Forex is the Largest Market
As I said before the first reason is the daily volume that is being traded. The daily amount of trades is close $4 trillion. Even though Forex does not have the central exchange there are banks and financial institutions that play major role in exchange. There are three major centers with such institutions: New York, London and Tokyo. Currencies of these three countries (US, Britain and Japan) are being traded the most.

Instant Trade Execution
If you are already involved in Forex then you know that orders are filled almost instantly. That is still because of the high volume that results in high liquidity. Therefore you will not get stuck with your position.

Currencies are Being Traded Around the World
What makes Forex unique is that traders trade currencies all around the world. That’s one of the differences between foreign exchange and some other exchange markets. Currencies of many countries involved in trading. However some of them preferred more by traders than others. For instance Euro, Dollar, Yen and Pound have higher trading volumes than New Zealand Dollar for example.

Continuously Open Around the Week
The fact that countries around the World are involved in trading Forex makes it possible for traders to trade all day long. This market is open 24 hours a day and 5 days a week. Forex is closed on weekends. Such continuity makes it very convenient handy for traders to schedule their own time around the day to trade.