Until the introduction of the internet, currency trading, which is commonly known as forex trading was restrained to interbank activity on behalf of the bank clients. Eventually, the banks started setting up proprietary desks to trade currencies for their own accounts and this was a trend that started being followed by the large MNCs (multi-national companies), high net worth individuals and hedge funds. With the propagation of the internet, a retail market was set up aimed at all those individual traders and the retail trading market provided easy access to the forex markets, either through brokers making a secondary market or through banks themselves.
The forex market – One of the largest markets with highest liquidity
As the largest market and with the highest liquidity, the Forex market usually offers a large number of benefits of traders. Now the individual retail traders can access the same trades as the banks and other online financial institutions and this market comprises of a daily volume which is typically between $4 and $6 trillion in US dollars. The forex market is obviously an over-the-counter market and this means that the brokers and dealers have direct dealings. Such entities enhance trades on the market and they are the ones who ensure a 24 hour working environment available for 5 and half days a week.
Retail forex trading- What is it and what are the benefits?
Over the past few years, there were a number of retail brokerage houses that have made foreign exchange currency trading reasonable and affordable. Trading has also become accessible like never before. The novices who are beginning in the forex market can start off using a paper account or a demo account and hence this way they don’t need to risk their dollars unless and until they’re confident and experienced about making the forex trading moves. Have a look at the various benefits of forex trading for the retail traders.
- Forex is a 24 hour market: The forex market is perhaps the only market that continuously operates on a daily basis due to the geographical difference between the different markets that are situated around the world. However, Saturdays and Sundays are day-offs for the forex trading market.
- Forex market is a hedge against inflation: Irrespective of whether here is a bear market trend or a bullish trend, traders can easily make profitable trades on the forex market. This market is bi-directional and traders can easily sell and buy both.
- No commission: The best thing about forex trading is that it doesn’t involve commissions. Traders only require paying for the spread that is involved and this can be as small as four decimal places.
- Highest leverage: Forex brokers offer retail traders 100 times leverage and favorable credit terms for each dollar that is invested by the trader. This automatically increases potential profits.
Hence, if you’re a prospective forex trader, you may consider the benefits of this trade as mentioned above. For better returns, you may hire a broker in the initial phase before you learn the tricks. For more information on forex, you may visit ETX Capital.