Forex Basics (3). Forex Trading Features

Forex Basics (3).  Forex Trading Features
Forex Basics (3).  Forex Trading Features


1. Forex Trading Features


1. Liquidity

The forex market is the most liquid market in the world. Speculators prefer trading in the forex market, Because of the large liquidity that it enjoys. 

The liquidity factor also helps to alleviate the problem of the difference between the cost estimated transaction cost, and its actual cost. 

If we compare the forex market and the small stock market, or the contracts market the illiquid futures are as large as coffee, and we see the forex market making a difference at that point of difference. 

And we mean by coefficients Liquidity, that the request is executed relatively quickly, which allows the completion of the transaction at the same request price

The difference has reduced The price of supply and demand in the forex market has decreased significantly over the past few years. 

Focusing Traders trade the major currencies that have high liquidity, and it is on these currencies that most of the trading volume takes place.


2. The possibility of trading 24 hours a day

Another distinguishing feature of the forex market over other markets, including the stock market, is the fact Trading in the forex market is 24 hours. 

Which means that traders can interact in real-time. With all the political news, or the economic changes that occur around the world. 

It also provides an opportunity for the market to work 24 hours, with the possibility of making profits, and stopping losses at any time of the day. 

More importantly, it reduces the gap problem The time between opening and closing occurs in most inactive markets over a period of 24 hours. 

That's why Most of the main commercial centers are located in 5 regions: London, New York, Sydney, Tokyo, and Frankfurt. 

Those five regions are in different regions, and therefore the timing differs between them, as it is available to the trader in the forex market, To evaluate its transactions over the course of 5 overlapping trading sessions. His trading opportunity starts at 5 pm on Sunday. Eastern time, and ends at 4:30 pm on Friday.


3. Margin trading/leverage

When we talk about margin trading, we mean the ability of the trader to trade more money than he has in his account. Indeed. In the forex market, if a trader has a small margin, he is able to trade on much larger positions. of what he owns, as opposed to trading in the stock market. The financial leverage allows the trader to amplify the profits that he obtains. It should be given a profitable opportunity.

Example: Forex brokers provide 200 to 1 leverage, which means that if you have a deposit With a margin of $100, you are able to buy and sell as much as $20,000 worth of currencies. In the same way, for $1,000, you can trade $200,000, and so on.

The difference between the forex market and the stock market is that the margin deposit requirements in forex are much less than the requirements to be complied with in the stock market. 

Thus, the value of the dollar in a margin deposit in forex is large.


4. No one can control the market

It is impossible for any single trader or bank to manipulate the forex market in his favor, or to control the market because he A giant global market, with many players. Central banks face difficulties if they want to bring about a change in the market for a long period of time. This is the opposite of what happens in the forex market, in which traders can cause A case of depression in stocks by selling short positions.


5 . Minimum limits for small accounts

It is easy to participate in the forex market compared to other markets because there are fewer requirements to open a Forex trading account. To be able to open a trading account in the forex market, this requires you have to put in A small deposit as a minimum. 

This makes the forex market accessible to anyone wishing to trade currencies. but You should know, that not all forex brokers offer mini accounts, but most do.


6. Commission/No Commission

Most forex brokers do not charge a commission, but they make money according to the difference between my price Supply and demand. That is, the profit is calculated according to the difference between the bid and ask price, and it is known as “Dealing.” Spread.” At the present time, and in normal market conditions, the difference between the bid and ask price should not be More than 3 points (0003.0.)

And now forex brokerage firms offer modern Electronic Communication Networks (ECNs). then getting the best spread between the bid and ask, but at the same time companies that supply you with that technology, You charge a commission on your use of the ECN, as the system for executing your trades. 

Inquire about the cost of the systems for executing trades from a company, The brokerage (the broker) that you deal with, as these systems offer you the best difference between the bid and ask price, so inquire about The price of that difference as well as the commission.


7. Constant availability of trading moves/opportunities

One of the most important attracting factors in the forex market is the availability of the continuous trading activity. 

At any time there is a movement In the rates of at least one of the major currency pairs, based on: net trading volume, and how much global news

The events that cause market volatility, while the market has an infinite number of opportunities.


8. Open sale (blank sale) without any restrictions

In the stock market, there are many regulatory restrictions that make it difficult - and in some cases prevented by force of law - for Small traders to participate in short-selling operations. 

In forex trading, there is no such thing, it is easy for you To enter short positions, as well as long positions.


2. Disadvantages of Forex Trading


1. Lack of a central trading platform:

One of the main weaknesses in forex trading is the lack of a central trading mechanism, which provides a central place in which to trade forex

There are trades. In this way, the market maker in forex is your trading platform

Traders want to Ensure the existence of regulatory rules that support their participation in the market.

While some prefer trading via ECN systems, They do not want the brokerage firm (the broker) to be the same as the market maker. Also, no central point where data are collected, means that there is no additional specific information about the market, such as information about trading volume, The same applies to the stock market and the futures market.


2. It deals with the economy of two countries in each transaction

By the nature of the situation in the forex market, you have two currencies from two countries for each position in the market, because the price of the currency is determined by the value of the other currency. 

This means, for any rate of circulation there are two countries (or two territories) that you have to set their conditions into consideration. In some cases, the problems of one of the two countries dominate the currency, and in other times the country is the second. This can be unexpected and sometimes leads to confusion in reactions. regarding news or events.


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