So why trade Forex?
There plenty of great reasons why to trade Forex and why those reasons can benefit your portfolio including: liquidity, market hours, leverage, low transaction costs, and diversification. These qualities can be beneficial whether you begin trading with $1,000 or $1 Million.
Trade Forex for Liquidity
Forex volume tops several trillion dollars each day in the foreign exchange market. This incredible trading volume offers liquidity that allows traders to instantly execute trades online.
For those who have full-time jobs outside their trading, Forex gives you the ability to trade a 24-hour market that opens Sunday afternoon and closes Friday afternoon. Trade at any hour from anywhere with an internet connection.
Trade Forex for Leverage
Let it be clear that leverage is a double-edge sword; exacerbating gains and losses. However, leverage can be a useful tool for traders who wish to begin trading with a smaller account. Leverage helps you control bigger positions than you would otherwise be able to, while many brokers protect against your account falling below zero (debit balance).
Trade Forex for Low Transaction Costs
While many Forex Brokers charge no commissions, a trader faces only a spread between the bid and ask prices as a transaction cost. This allows traders with a smaller account balance to keep transaction costs down. Transaction costs are uniform as a percentage of the trade size when you trade forex.
Trade Forex for Diversification
One of the reasons why to trade Forex is that all of your money should not be in any one asset class. You should diversify your assets across many asset classes. Stocks, bonds, real estate, commodities, and foreign exchange are examples of different asset classes that you can allocate funds to. When you have a mix in your portfolio your overall risk can be reduced, since different asset classes react differently to economic situations. Trade Forex with only a percentage of your assets.