Forex trading has its advantages, its secretes and its pitfalls. Every trader who decides to join a professional online platform has to learn by constant repetition and study through online tools such as XTrade Europe’s Academy.
Advantages of Forex trading through professional platforms such as XTrade Europe
What advantages does Forex market have compared to other types of investments?
International currency exchange market Forex is the most dynamically developing market among all financial markets in the world. It is related to the fact that currency market Forex has many significant advantages compared to other financial institutions: the highest liquidity, operations are executed 24 hours a day, the lowest cost of deals, margin trading, dynamism, huge number of participants and many others.
The trade volume at Forex is 1 – 3 trillion dollars per day, that’s extremely higher than daily turnover of stock and futures markets. Due to high liquidity traders are able to conduct operations of any volume by one and the same market quotation. The high liquidity of the market means that there are always abundant number of sellers and buyers, so there are no problems with opening and closing positions. And also due to the high liquidity exchange rate is smooth even during the crisis. Chart rarely has gaps which cannot be referred to the stock market. Forex works 24 hours a day 5 days a week so trader can execute deals constantly through platforms such as XTrade Europe. Placement, monitoring and execution of all orders are carried out 24 hours a day. Trader is able to open position right after the news release instead of waiting for stock market opening together with tens of thousands of other traders. A great advantage of Forex market is absence of commissions for deals, the only fee trader has to pay is difference between buy and sell price – spread.
The prices at Forex market is determined only by demand and supply. So very often strong trend appears on it and traders have all chances to increase their profit. Cogent favour of the currency market Forex is principle of margin trading. Having even insignificant initial capital trader can work with funds 10 times more than his initial deposit. If the trader is successful, trading forex can grow your funds exponentially.
Traders also have access to a great number of extremely useful instruments, in particular, liquid currencies and crosses. Every trader has opportunity to choose from slow or fast instruments. Forex works always and anywhere and if you have free access to computer and Internet, your power at the international currency market is limitless.
All Forex operations are conducted in accordance with margin trading, meaning every participant has a possibility to trade using significantly higher amounts than their account balance.
Margin trading with reliable platforms such as XTrade Europe has numerous advantages. A modest start-up capital allows a trader to conduct deals with the volumes dozens or even thousands times bigger, which is called “leverage”.
Trades are going on without investing all amount of money, which decreases expenditures and makes it possible to open sell or buy deals.
Margin is measured in percent of the deal volume and depends on the chosen instrument, account type and trade volume. On holidays and weekends margin can grow. A few types of margin are singled out: initial margin, margin requirement, i.e. the one locked up in the account as a guarantee in case of losing position, and minimum margin, maintenance margin, needed to keep the position open. Leverage is a ratio of the margin to the offered sum of money. For example, 1:100 indicates a necessity to deposit 0.01 of the margin to get the full sum, thus a trader’s deposit increases 100 times. So having insignificant capital the trader is able to conduct large operations.
In case a trade loses, which increases the minimal margin; it is closed by the broker on default. The position is called “stop out”. Before closing the deal, a Forex company warns a trader about needed lift of the margin for the open position which is called “margin call”. In this situation the security deposit is returned with the account of profit or loss.
One of the main marginal trading aspects is choosing the leverage. Keep in mind the average volatility of the financial instrument quotes, as it is not recommended to use high leverage for very volatile instruments.