Open around the clock
Unlike stock markets, which are only open for a limited amount of time each day, the forex market is open 24 hours on weekdays. Trading starts off on Monday morning in New Zealand and then follows the sun until the markets close in North America on Friday afternoon. This means that you can trade a currency pair – such as EUR/USD – at any time, not just during office hours when you are at work.Market size
The forex market is the largest financial market in the world. Every day, more than $5 trillion is traded, creating huge liquidity. This means that no matter whether you have a few thousand dollars or billions, there are always buyers and sellers available to trade with you. Because of the size, this also makes the market very difficult for anyone to manipulate – so all investors have relatively fair trading conditions.Low trading costs
Whenever you trade, you need to think about how much each trade costs you. Fees, commissions and stamp duties always cut into your profits, so finding a market with low trading costs is essential. In fact, forex trading is probably the most economical financial market from this perspective – making a forex trade is very inexpensive. In large part, this is due to intense competition between forex brokers – many even offer bonuses for opening an account.High leverage
With forex, a relatively modest amount of capital can go a long way. Forex brokers offer a large amount of margin in comparison to stocks – rather than getting 2:1 margin, you can get up to 50:1 in the US and even higher if you are trading in some other countries. This means that if you have $1,000 in your account, you can open a position with a value of up to $50,000. This magnifies the effect of currency movements, which creates much greater profit opportunities – although it’s essential to manage risk at these margin levels.Strong trends
One of the best ways to make a profit in any financial market is to spot a trend and follow it. Forex markets generally have very well defined trends that last for extended periods of time. This makes it easier to jump on the trend and make consistent profits over time. The reason for this is that the performance of currencies is tied to the long-term economic performance of a country, which tends to follow a relatively slow cycle. However, it’s important to watch out for disruptive events – for example, the recent move by the Swiss National Bank to uncap the value of the Swiss franc against the euro caught many forex traders by surprise, which led to major losses in some cases.
Editors’ Picks
EUR/USD retreats below 1.0700 as USD rebounds
EUR/USD lost its traction and retreated slightly below 1.0700 in the American session, erasing its daily gains in the process. Following a bearish opening, the US Dollar holds its ground and limits the pair's upside ahead of the Fed policy meeting later this week.
USD/JPY recovers toward 157.00 following suspected intervention
USD/JPY recovers ground and trades above 156.50 after sliding to 154.50 on what seemed like a Japanese FX intervention. Later this week, the Federal Reserve's policy decisions and US employment data could trigger the next big action.
Gold holds steady above $2,330 to start the week
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.
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