Forex trading is the trading and exchange of different foreign currencies of the world in the global market. It is also known as the foreign exchange market or the forex market. It is the largest of all the markets in the world and is the most liquid one. It is larger than both the stock and capital market combined. One can trade forex online, it is open globally for 24 hours a day and five days a week. The market opens up as soon as the institutions in New Zealand open. Various trading sites guide on how to invest and trade in such markets.
The market involves the trading of currency in pairs. One can choose from a wide range of about 60 currencies to trade-in. Various factors affect forex trading such as economic conditions, market conditions, political situations and various others. In this article, we will discuss the benefits that forex trading has to offer. These are as follows:
- Largest financial market: Forex market is the largest of all the financial markets in the world. This is due to the size of the transactions that take place in the market. The value ranges between $4 -$5 trillion every day. No other market has the same liquidity. It is a global market accessible to all.
- Flexible trading hours: Due to the time gap between different countries, this market offers flexible trading hours. It is open 24 hours a day and five business days a week. It has very flexible operating time.
- Highly liquid market: Forex market is the most liquid market out of them all. It has a large volume of transactions taking place on daily basis. One needs to decide if they want to buy and go long or want to sell and go short. The market is highly volatile as numerous transactions take place each day.
- Centralised and transparent trading system: Forex trading includes trading in the foreign exchange market. The market is fully centralised and highly transparent. All the transactions are visible to all. It allows the individual to get maximum returns on minimum investments.
- Trading option for different currency pairs: In the forex market, one has to deal in pairs. One is the base currency and other is the quote currency. There are various options for such trading pairs. One can choose from a large base of 90 such currency pairs including major currency pair, minor currency pair, emerging currency pair or exotic pair.
- Hedging benefits: Hedging is one option that is commonly used by traders to protects against the fluctuations that take place in the market. It is one way to mitigate losses.
The globalisation of economies has made forex trading very easy. It is not the market only for large traders but for all. One can easily trade in forex online after taking into consideration the various factors. Various platforms provide directions and guidance to the traders to ensure smooth conduct of the market. One needs to have full knowledge about the market to get maximum returns out of it.