The Benefits of Forex Trading

Foreign exchange (forex) or currency trading is a global market that's incredibly liquid, with an immense daily trading volume. The forex market has some unique advantages over other markets after you've learned the ropes.

• It's a 24-Hour Market for Five Days

The forex market is worldwide, so trading is pretty much continuous as long as there's a market open somewhere in the world.

• There's High Liquidity

The high liquidity means large amounts of money can be moved into and out of currencies with generally small spreads—the differences between the bid prices for potential buyers and the ask prices for potential sellers.

• Transaction Costs Are Low

The cost of a transaction is typically built into the price in the forex market in the form of the spread.

• You Can Use Leverage

If you were to trade at 50:1 leverage, for instance, you could trade $50 for every $1 that was in your account. That means you could control a trade of $50,000 using only $1,000 of capital.

• There's Profit Potential from Rising and Falling Prices

The forex market has no restrictions on directional trading. This means that if you think a currency pair is going to increase in value, you can buy it (or go long), and if you think it is going to decrease in value, you can sell it (or go short).