Forex Trading Advantages

Compared to other financial markets, the forex market offers many advantages, such as 24 hour trading, no commissions and margin trading. The advantages that forex trading offers are listed below.

Although the forex market is by far the largest and most liquid in the world, forex traders must focused on seeking profits in mainly stock and futures markets. This is mainly due to the restrictive nature of bank-offered forex trading services.

ADVANCED-FOREX offers both online forex trading and traditional phone forex trading services to the small investor with minimum account opening values starting at 5000 USD. There are many advantages to trading spot foreign exchange as opposed to trading stocks and futures. Below are listed those main advantages.

Bid/Ask Spread rates

Spread rates have been tightened dramatically in recent years. Most online forex brokers offer a spread of at least 3 pips on EURUSD which is the most widely traded and liquid currency pair. ADVANCED- FOREX offers a spread as low as 1.8 pips on EURUSD. Only liquid stocks offer tight spreads in stock trading. Those spreads often represent on average between 0.04% and 0.06% of the value of the stock. In comparison ADVANCED-FOREX offers a 1.8 - 3 pip spread on all major currencies. This equates to approximately between 0.014% and 0.023% on the underlying dollar value.

Exact percentages at current rates (February 2009):

• EURUSD 1.8 pips 0.014%
• GBPUSD 2.8 pips 0.019%
• USDJPY 1.8 pips 0.019%
• USDCHF 2.8 pips 0.023%

Spreads may vary anywhere between 5 and 9 pips, within the futures market, and can become even larger under illiquid market conditions (which tends to happen substantially more often in futures currencies).

Forex trading commissions

ADVANCED-FOREX offers forex trading commission free. This is in sharp contrast to what stock and futures brokers offer. A stock trade may cost anywhere between USD 5 and 30 per trade with online brokers and typically up to USD 150 with full service brokers. Futures brokers often charge commissions anywhere between USD 10 and 30 on a round turn basis.

Forex trading margins requirements

ADVANCED-FOREX 1% margin. In layman's terms that means a trader can control a position of a value of USD 1'000'000 with as little as USD 10'000 in their account. By comparison, futures margins are constantly changing and are also often quite sizeable. Stocks are generally traded on a non-margined basis and this can be as restrictive as 50% or so.

24 hour forex trading

The Forex market is open 24 hours a day opening in Asia around 24:00 CET Sunday evening and closing in the United States on Friday around 23:00 CET. Although ECNs (electronic communications networks) exist for stock markets and futures markets that supply after hours trading, liquidity is often low and prices offered are often uncompetitive.

No Limit up / limit down

Margin wise, a trader has exactly the same capacity when initiating a selling or buying position in a spot market. In spot market trading when you're selling one currency, you're buying another. Futures markets have certain constraints placed upon them that limit the number and type of transactions a trader can make under various price conditions.In other words the futures price will re-adjust to the spot price the next day. In the OTC market these trading constraints do not exist permitting the trader to truly implement his or her trading strategy to the fullest extent. Since a trader can protect his position from large unexpected price movements with stop-loss orders the high volatility in the spot market can be fully controlled.

Sell before you buy

Margin wise, a trader has exactly the same capacity when initiating a selling or buying position in a spot market. In spot market trading when you're selling one currency, you're buying another. Equity brokers offer extremely restrictive short-selling margin requirements to their customers. This means that those customers do not possess the liquidity to be able to sell stock before they buy it.

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Advanced-forex is a professional financial intermediary, which our counter parties are directly regulated by the Swiss Federal Department of Finance, Anti Money Laundering Control Authority. As forex specialist, Advanced-forex provides only currency trading via highly professional forex trading software. All customers are aware that this information or any part thereof has been prepared without taking account of your objectives, financial situation and/or needs. This information is not intended as personalized investment advice and does not constitute a recommendation. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. The analysis is based on the information which Advanced-forex finds reliable and accurate, but Advanced-forex does not assume any responsibility for any material nor for the transactions made on the basis of the information or the estimates of the analysis. Advanced-forex cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct, indirect and/or consequential loss arising from any use of this information, document or its content. All opinions and estimates constitute Advanced-forex analysis as of the data and are subject to change without notice. Advanced-forex does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. Past performance is not a reliable indicator of future performance.