Why is the Forex market attractive to investors and home-based traders?
Professional investors for individual accounts have dramatically increased their level of participation in the Forex markets in recent years. Add to this the growing use of Forex by individual investors and home-based traders, and you have a rapidly growing industry of cash flow creating profits whether the market goes up or down.In the Forex market, a position may be established for any holding period of time, whatever the trader desires. Individual wanted to invest in this market, he could invest through a bank and with $1 million cash deposit backed by a requirement of $5 - $10 million dollars net worth. A slightly better option was provided by the brokerage firms, which asked a lower minimum deposit on average of only a quarter million dollars.
But now, the Forex market has been opened up to small-scale, home-based traders. Unlike the huge sums previously required by the banks and brokerage firms, comparatively far lower margin requirements are finally available which now allow virtually any individual to trade with the big boys. In addition, independent traders can take advantage of the growing boom in computer and communication technologies that have made this market accessible in ways previously exclusive only to large players.
The Forex is very liquid, and this market can absorb trading volumes and per trade sizes that diminish the capacity of any other market. On the simplest level, liquidity is a powerful attraction to any investor or independent trader as it suggests the freedom to open or close a position at will.
A substantial attraction for participants in the Forex market is the 24-hour 5 day a week nature of the market. In Forex, a participant need not wait to react to an unfavorable event, as is the case in many markets.
Because the market is highly liquid, most trades can be executed at a single market price. This avoids the problem of slippage found in futures and other exchange-traded instruments where limited quantities can be traded at one time at a given price.
Over long historical periods, currencies have shown substantial and identifiable trends. In the Forex, each individual currency offers a unique historical pattern of trends providing home-based independent Forex traders’ diversification opportunities within this massive cash exchange.
IMPORTANT NOTICE: Fx trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in forex. Don't trade with money you can't afford to lose.