Forex trading started during the time of the Babylonians which is a system designed for the currencies and exchange. With that, foreign exchange was introduced so citizens will have more monetary stableness and reliability since the gold standard was removed and the forex market was born.
Today, the forex market is the largest market in the world with more than $5 trillion traded on the forex market daily. When it comes to trading, traders want to strive for the best in order to achieve the best by benefitting from the best trading conditions, superior trading platforms, and of course, to trade with the best market price.
Hence, millions of traders choose to trade forex as they have come to understand why Forex is the best market to trade in. These traders explore the potential of the online trading market and seize all the possible opportunities open to them. With a great understanding of what forex is, various traders have various preference or reasons for choosing the Forex market. Thus, forex caters for all types of traders.
Therefore, why is Forex the best market to trade?
Forex is made up of multiple elements that made it the best market for online trading. However not every element will apply to your needs or your trading strategy, yet most traders define the following elements as answers to efficient and effective online trading.
Software advancements have made our lives much easier, and the same applies to online trading as well. There is an increasing number of Forex trading platforms appearing every year, and there are even more constant update for established Forex trading software. Compared to many other online trading markets, technological advancements is definitely one of the reasons why Forex is one of the most potentially lucrative markets to trade on.
In addition to this, the retail Forex software industry is also enriched by third–party software providers, who supply various add-ons and plugins for the most common trading platforms including Meta Trader 4 and Meta Trader 5.
For instance, Doo Tech, a software technology provider serving the financial industry has developed its own CRM system, social trading system and clearing system. Now it has an international comprehensive financial service group with financial technology as its core. Thus, this is why Forex is an innovative way to trade online.
Once you’ve come to understand the mechanics of forex trading, the rest of the process is straight forward. Traders acquire an asset for a favourable price, and they expect to get rid of this asset. The more volatile the market is, the higher the opportunities there are to acquire and get rid of the assets traders have. With that understanding, traders find little sense to hold on to their capital when the market is not moving.
However, with that said, volatility in the forex market is great and traders can constantly expect to see a price movement on one of the major currency pairs on almost any day of the week. Hence, traders always look out for volatile markets and volatile instruments which marks volatility as one of the main benefits of the forex market.
Most importantly, traders should be well aware that volatility is a double-edged sword where the market can quickly turn against your favour, so it’s important to limit your exposure with risk management tools.
Forex is one of the most accessible as compared to any other online trading market. Trading online can be started with as little as 100USD. When it comes to the trading capital requirement, it is lower than other financial markets. With that advantage, individuals or companies can easily sign up for a trading account online as most brokers operate online.
Traders also have the ability to trade risk-free with a demo trading account. This means that traders can avoid putting their capital at risk, and they can choose when they wish to move to live markets. For example, Doo Prime demo account enables traders to gain access to the latest real-time market data, the ability to trade with virtual currency, and access to the latest trading insights from expert traders.
To open your free demo trading account, click the here!
Other than the contributing elements of forex trading, the many benefits of forex trading also include convenient market hours, high liquidity, the ability to trade on margin and hedging with forex.
Forex market hours
The foreign exchange market is open 24 hours a day, five days a week which traders take advantage of as it is a global market of different active session’s forex trading. The four major forex exchanges are located in London, New York, Sydney, and Tokyo and each exchange has unique trading hours.
This means that unlike any other financial markets, investors can almost always respond to currency fluctuations caused by economic, political and social events as they occur, without having to wait for the market to open.
The forex market closes on Friday night at 10 PM (UK time) and does not open again until 9 PM (UK time) on Sunday evening. However, the closing hours of the market only applies to the retail traders but not the central banks or the related organizations. Therefore, forex trading does take place over the weekend. By that, there can be a difference between the Friday closing hours and the Sunday opening hours which is known as the gap.
Hence, traders need to be highly aware of the weekend forex trading hours and alter their position accordingly. If the traders do not wish to expose their position to the risk of gapping, traders may want to consider closing their position on Friday evening or placing stops and limits to manage the risk.
Additionally, it is important for traders to remember that the forex market’s opening hours will vary in March, April, October and November, as countries shift to daylight savings on different days.
Liquidity is the ability of an asset to be quickly converted into cash. In the world of forex, the high liquidity means a large amount of money can be moved into and out of currencies with generally small spreads- the difference between the bid prices for potential buyers and the ask prices for potential sellers.
Trading on margin
Trading on margin allows traders to borrow funds from their broker in order to purchase more shares than the credit in your account would allow for on its own. Hence, margin lets the traders amplify their potential returns as well as their losses.
Hedge with Forex
Forex hedging refers to a technique of strategically opening additional positions to protect against adverse movements in the foreign exchange market. By that, it means that hedging itself is the process of buying or selling financial instruments to offset or balance trader’s current positions and at the same time reducing the risk.
Thus, it is a good way of mitigating loss or limiting to a known amount. Forex hedging comes in a variety of strategies but one of the most common is hedging with multiple currency pairs. By choosing forex pairs that are positively correlated, such as GBP/USD and EUR/USD, but taking positions in opposite directions can limit the trader’s downside risk. For example, a loss on a short EUR/USD position could be mitigated by a long position on GBP/USD.
Alternatively, traders could use forex to hedge against loss in other markets, such as commodities. For instance, as the USD/CAD generally has an inverse relationship with crude oil, it is commonly used as a hedge against falling oil prices.
Why trade with us?
Here are the additional advantages that traders can benefit from Doo Prime.
Firstly, Doo Prime is a trustworthy company to trade with as Doo Prime is a wholly-owned subsidiary of Doo Holding Group which has earned multiple international awards. Our company is well established with years of industry experience alongside world-class technical support. We also cater to provide retail customers and professional traders with the best liquidity solutions for financial markets, allowing investors to enjoy the fastest rates at the lowest market rates.
Doo Prime is an innovative company that will adopt traders’ feedback attentively to continuously improve the platform’s professionalism and customer trading experience. For instance, we provide a 24/7 customers service and a large number of a high signal source in a single community to accommodate our customers.
With over 15,700+ customers, Doo Prime offers various trading products including forex, stock, futures, metals, and CFDs that allows multiple funding and withdrawal options with tight spreads and no commission imposed.
Ultimately, Doo Prime works with multiple partners to become a financial market leader and your private veteran broker. Recently, Doo Holding Group partners with strategic alpha to provide insightful investment analytics where Maurice Pomery, founder of Strategic Alpha will be directly preparing market reports to deliver for our clients daily.