forex benefits

We already have mentioned that factors such as the size,volatility and global structure of the forex markethave all contributed to its rapid success. Given thehighly liquid nature of this market, investors areable to place extremely large trades withoutany given exchange rate. These large positionsare made available to traders because of thelow margin requirements used by the majorityof the industry's brokers. For example, itpossible for an investor to control a positionof US$100,000 by putting down as little as US$1,000up front and borrowing the remainder from his or her broker. This amount of leverage acts asdouble-edged sword because investors can realizelarge gains when rates make a small favorablechange, but they also run the risk of a massiveloss when the rates move against them. Despitethe risks, the amount of leverage available inthe forex market is what makes it attractive for many speculators.The currency market is also the only market thatis truly open 24 hours a day with decent liquiditythroughout the day. For traders who may have a day jobor just a busy schedule, it is an optimal market to tradein. As you can see from the chart below, the majortrading hubs are spread throughout many differenttime zones, eliminating the need to wait for an openingor closing bell. As the U.S. trading closes, othermarkets in the East are opening, making it possibleto trade at any time during the day.