Online Forex trading is the trading of one currency for another through the use of the internet. The Forex market is actually the largest financial market in the world and it is an over the counter (OTC) market. This means that there is no centralized location like the New York Stock Exchange from which trading activities must take place. Because of this unique aspect of the Forex market, with online Forex trading, one can deal in Forex from any place in the world. In addition, with online Forex trading, it is possible to trade in Forex around the clock five days in a week without having to leave the house.
Advantages -
Online Forex trading has become very popular in the past decade because it offers traders several advantages:
Forex Never Sleeps
Trading goes on all around the world during different countries' business hours. You can, therefore, trade major currencies at any time, 24 hours per day. Since there are no set exchange hours, it means that there is also something happening at almost any time of the day or night.
Go Long or Short
Unlike many other financial markets, where it can be difficult to sell short, there are no limitations on shorting currencies. If you think a currency will go up, buy it. If you think it will fall, sell it. This means there is no such thing as a "bear market" in Forex - you can make (or lose) money any time.
Low Trading Costs
Most Forex accounts trade without a commission and there are no expensive exchange fees or data licenses. The cost of trading is the spread between the buy price and the sell price, which is always displayed on your trading screen.
High Liquidity
Because Forex is a $4 trillion a day market, with most trading concentrated in only a few currencies, there are always a lot of people trading. This makes it typically very easy to get in to and out of trades at any time, even in large sizes.
Available Leverage
Because of the deep liquidity available in the Forex market, you can trade Forex with considerable leverage (up to 50:1). This can allow you to take advantage of even the smallest moves in the market. Leverage is a double-edged sword, of course, as it can significantly increase your losses as well as your gains.
International Exposure
As the world becomes more and more global, investors hunt for opportunities anywhere they can. If you want to take a broad opinion and invest in another country (or sell it short!), Forex is an easy way to gain exposure while avoiding vagaries such as foreign securities laws and financial statements in other languages.
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