What Makes Forex Trading So Attractive?

 

A few decades ago, trading on the international markets was a pipe dream for practically everyone from every walk of life in almost every country on earth.

 

Up until recently, access to extremely liquid global markets for retail traders was only available to professional traders and interbank dealing desks through electronic platforms like those offered by OVALX (editor's note: or ETXCapital depending on when this is being published).

 

What makes forex trading so popular?

In the early to mid-1990s, when proprietary platforms were developed with the goal of making the foreign currency markets accessible to anybody over the age of 18, anywhere in the world, the popularity of foreign currency trading—often referred to by the abbreviation Forex trading—rose.

 

The constant accessibility of the forex market makes it appealing to many traders. The foreign exchange market is open six days a week, 24 hours a day.

 

Sundays are the only day of the week when there is no liquidity in the forex market. Other than that, it is a very liquid, quick-moving market that frequently has a much higher level of engagement and immediateness than some other markets that depend on central counterparties, like exchanges, for execution or are based on underlying assets, like commodities, where physical delivery is necessary for settlement.

 

For a big number of traders worldwide, the ability to open and close positions in a vibrant, really global, and instant market is quite alluring.

 

Access to markets

The global forex markets see a daily trading volume of over $6.6 trillion, and this volume is constantly rising, making the market an incredibly interesting option for retail traders who may trade in one of the most liquid and highly capitalized markets in the world.

 

Additionally, because forex trading is leveraged, when a trader uses margin capital that they deposit into a trading account to make a purchase, the position's value is increased by the leverage ratio when it is traded on the currency markets.

 

A trader might start a position worth £3,000 with just £100 of capital if, for instance, leverage is set at a ratio of 1:30 and they choose to invest £100 in a forex transaction. This is because the value of the trade on the live market is £3,000.

 

The minimum margin at OVALX (or ETX) is 0.35 percent for professionals and 3.33 percent for ordinary traders.

 

This indicates that the maximum leverage for retail traders is a ratio of 1:30.

 

Low entry costs and costs

The vast majority of people who want to trade the financial markets may readily access forex trading on an over-the-counter (OTC) basis with a retail broker, unlike exchange trading, which has exorbitant yearly membership fees and clearing fees.

 

The majority of traders do not have to pay brokerage fees or commissions, therefore maintaining a Forex trading account has relatively low costs.

 

Spread betting typically carries no costs at all, although Contract For Difference (CFD) products do incur commissions. The spread between the currencies being traded is one of the main sources of income for many forex brokerages.

 

Risk

Negative balance protection ensures that traders do not lose more money than they put into their trading account, even while leverage allows them to trade in a highly liquid market. This risk is present in all forms of trading across all markets and products.

 

The majority of trades are completed through an internal dealing desk within the forex brokerage, which results in very careful risk management of the trading activity. One key advantage is that risk managers can act in the trader's best interest by limiting exposure to negative balances.

 

Summary

Overall, forex trading provides a quick, affordable way for almost anyone, regardless of location, with modest or substantial resources to be able to participate in the international financial markets.

 

With low entry hurdles, no requirement for exchange membership, and no fee-heavy execution and settlement charges associated with some other asset classes or trading methods, this market is exciting and very liquid. It is also conducted on an over-the-counter (OTC) basis.

 

Over 60 currency pairs are available on OVALX, including all of the main, exotic, and minor currencies that make up the majority of the currencies traded on international markets.

 

Conclusion 

We hope that this blog post will be beneficial for you. We will continue to create useful works in order to get inspired by everyone. We are sure that we will achieve splendid things altogether. Keep on following Finage for the best and more.

 

You can get your Real-Time and Historical Forex Data with Finage free FX Data API key.

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