Online Forex Trading has become ubiquitous now. One can do currency trading from anywhere in the world. Following are the more known features of foreign exchange trading.
Liquidity is one of the most important features of forex trading. It increased from $600 billion in 1998 to $2.7 trillion a day in April 2006. There are always buyers and sellers in the forex market whatever the direction. There are always brokers available somewhere providing bid / ask rates.
There is no insider information unlike the stock markets and room for market manipulation is extremely less. Many factors affect forex currency trading like inflation, GDP, fiscal deficit or surplus, interest rates, unemployment, international trade etc. Any information relating to these becomes instantaneously available across the globe to each forex broker and forex trader.
Because of the above, no one is in a position to move forex trade in any particular direction. In stock markets, traders often miss vital information. They come to know about the reasons for movement in the prices of a particular stock only after the damage has been done. There is a lot of insider information and price manipulation.
There is never a bear market in forex market. Participants have the ability to profit in rising and falling market. One always plays in pairs. If one buys one currency, he will sell another currency at the same time.
Online Forex Trading is free and fair for every one. It is free in the sense that there are no fees involved, unlike the stock market. A forex broker makes up his fees from bid / ask spreads. It is fair because, it is available the same way to even a very small trader as to a major financial institution or bank. Forex News is available to everyone equally.
Forex market is highly unregulated. There are hardly any constraints for doing this type of online business. There is no centralized place for doing FX trading like the NYSE. All one needs is a secure internet connection and a forex trading platform.
Leverage can be by far the most attractive feature. Some forex brokers can stretch it to as much as up to 400 percent. Leverage is a powerful money making tool. With a ratio of just 50:1, $10,000 can enable a forex trader to have a hold on $500,000 worth of foreign exchange.
Because of the leverage factor, both profits and losses get magnified. So one has to be careful. But one positive factor is that one can never lose more than the margin. Therefore, it is always advisable not to play more than the amount one is prepared to lose.
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