Written by Robert McKinley

Why Choose FOREX?

FOREX is the largest financial market in the world, with a volume of over $4 trillion a day. For proper perspective, the daily volume of the New York Stock Exchange is $25 billion. In fact, the daily trading volume of FOREX is three times the total volume of the stock market and the futures market combined.

So what makes Forex so attractive?

Here are some of the most important reasons more people choose the Foreign Exchange Market than any other financial market in the world:

• No commissions: There are no clearing fees, exchange fees, government fees, or brokerage fees. Brokers get paid for their services through the bid-ask spread.
• No middlemen: When you trade, you are dealing directly with the market responsible for the pricing on a particular currency pair.
• No fixed lot size: Unlike other markets such as the futures market, in spot Forex, you determine your own lot size. This can be very advantageous and you can learn more about that later.
• Low transaction costs: A typical retail transaction cost for a FOREX trader is less than 0.1 percent under normal market conditions and with certain large dealers it can go as low as .07 percent. You can learn more about this later.
• A 24-hour market: Between Sunday evening and Friday afternoon (U.S.A., EST), the Forex market never sleeps. Just think of the flexibility this gives traders— part-time or full-time!
• It is a "democratic" market: Because the Foreign Exchange Market is so large and has so many participants, it is all but impossible for any single entity (not even a central bank) to control market prices for an extended period of time.
• Leverage: With a small margin deposit, you can control a much larger total contract value. This means that when used properly, it can enable you to make nice profits while you keep risk to a minimum. With a FOREX broker who offers 100 to 1 leverage, a $50 margin deposit would enable you to buy or sell $5000 in currencies. With the same $50 and 200 to 1 leverage, you could trade $10,000 in currencies. Do the math and see how much you could trade with a $400, $800, or $1,000 deposit.
  
  While leverage can be a wonderful thing in FOREX trading, it can also be treacherous without proper risk management. So be sure to learn how to manage your risk before you jump into real-money trading.
• High Liquidity: This means that a FOREX trader can virtually always be sure that a trade order will be filled and that if you set a "limit order" or a "stop loss order" they will always work for you. You can learn more about these types of orders later.
• Free Demo Accounts: One of the most important freebee is the free demo account. It will enable you to practice your skills and strategies in real-time just as if you are trading with real money but you will be trading with "play" money. Everything will  be the same as in a "live" FOREX account except that you will not have to risk any real money.
• Other freebees: In addition to free demo accounts, most online brokers provide news, charts, analysis, and other resources to help you become more successful in FOREX.
• Pick your account size: When you feel ready to "go live", most brokers offer “Mini” and “Micro” trading accounts. Some start as low as $300. However, there are pros and cons as to whether one should use these small accounts. So be sure to learn more before you "jump in" to one.