The cash/spot FOREX markets contain certain unique attributes that offer an unmatched possibility for profitable trading in all kinds of market conditions or any step of the business cycle. So now you must be thinking, why bother? Well, the answer to that is quite simple. Here’s what FOREX has to show for itself:
24-hour market: All the
market conditions can
be profited from at any
time, so there’s no
need to wait for the
‘opening bell’ that
exists with the
Highest liquidity: The FOREX market is one of the most liquid markets that ever existed. This means that a trader can enter or exit the market whenever they feel like it all through almost any market condition, minimal execution barriers or risk and no limits for daily trading.
High leverage: A leverage ratio of up to 400 is considered normal when compared to a leverage ratio of 2 (50% margin requirement) in the equity markets. Obviously, this makes trading in the cash/spot FOREX market uncomfortable as well because it makes the risk of the down loss much higher, but in the same way, it makes the profit potential on the upside much nicer.
Low costs for transaction: Under the normal market conditions, the retail cost for transaction (the bid/ask spread) is actually less than 0.1% (10 pips). The spread could be less than 5 pips at bigger dealers, and may increase a great deal in more dynamic markets.
Always a bull market: When you trade in the FOREX market, you are selling or buying one currency in exchange for another. Essentially, a bull market or a bear market for a currency is defined in terms of the outlook for value against other currencies. If the outlook is positive, you get a bull market where a trader profits by buying the currency against other currencies. However, if the outlook is negative, we have a bull market for other currencies and a trader profits being forced to selling the currency against other currencies.
In any case, there is always an opportunity for bull market trading.
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