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High liquidity in the foreign exchange market for the main currencies

The foreign exchange market is a very liquid market, as very large and extensive sales are made. There are Forex brokers, where trading is only possible from a volume of 100,000 euros. However, the liquidity must be somewhat limited by this, since this is primarily valid for the standard currencies, which are traded the most. These include, as already mentioned, the US dollar, the euro, the Swiss franc, the British pound and the Japanese yen. Trading in these major currencies accounts for approximately 80 percent of all forex market trading. For this reason, there is no need to fear that an order will not be executed because the market lacks the necessary liquidity.

However, the situation is somewhat different for the smaller currencies, which are then only traded to a lesser extent in terms of the number of orders. Therefore, the available liquidity in the main currencies is an advantage. In addition, in the case of small or exotic currencies, the situation can arise that an order cannot be executed due to a lack of liquidity.

Trading with foreign exchange is possible with a small investment due to the leverage

The amount of capital invested by the customer usually depends on 2 factors. These include on the one hand, the lever provided and on the other hand the lot requested by the broker.

Example for clarification:

The transaction consists of purchase US Dollar against Euro, the leverage 100 : 1; the minimum trade amount is one standard lot and the customer's capital investment is 1,000 Euro (100,000/100).

On the basis of this example, an investment of at least 1,000 euros is required from the customer, since the broker requires a minimum trading amount of 100,000 euros for the standard lot. Due to the given leverage of 100 : 1 this leads to the fact that a relatively high minimum capital investment of 1,000 Euro is required.

However, this is generally not a typical minimum stake for brokers. Many brokers require only a mini or micro lot instead of a standard lot. This means that a smaller amount (usually 20 or 50 euros) must be used for a higher leverage.

The ability to trade almost around the clock from home or on the road

Here, the customer can not only trade from home, but also on the road with the mobile devices. However, the prerequisite for this is that a functioning and well-established Internet connection is available. Today, terminal devices such as laptops, desktop PCs, tablets and smartphones are used for this purpose.

However, many traders appreciate the home PC for these activities. However, mobile trading is becoming more and more popular and is becoming more and more important, as customers on vacation or during a business trip also have access to the trading platform and foreign exchange trading.

The advantages also include the fact that trading is possible almost around the clock. This is due to the fact that the trading hours of the largest markets usually follow the other trading hours of another market. At 9.00 a.m. in the morning, for example, the European stock exchanges open. These are then followed by the US stock exchanges from 16.00 hrs. At 22.00 o'clock the US-American stock exchanges close and after approximately 1 hour difference already again the Asian and Australian currency stock exchanges open. This makes it possible to trade almost around the clock. Between late Friday and Sunday evening there is a compulsory break. Sometimes there are isolated brokers who offer Sunday trading.

Profits possible in a short time

To ensure that profits are possible in a short time, the leverage provided by the broker and the manageable capital investment ensure this. For example, with a capital investment of 100 euros, it is possible to trade a total amount of 40,000 euros with a leverage of 400:1. However, the positive price changes refer to the total trading volume and in the above case to the 40,000 Euro.

If, for example, the US dollar exchange rate rises by two percent against the euro on a single day, the profit would be 800 euros for a trading volume of 40,000 euros. However, this profit of 800 Euro does not have to be set in relation to the 40,000 Euro, but only to the actual capital investment of 100 Euro. In this example, a profit of 700 Euro would have been achieved for the customer on one day. On the other hand however also the risk is present that there are losses and thus the capital employment is then lost.

Free and exciting time management

There are a larger number of players in this market who have chosen to trade foreign exchange because it is also a very exciting and thrilling activity. Some market participants enjoy every second of the course of the exchange rates on the screen and this especially on the charts displayed there. It is partly also possible, on the basis of different diagrams with candlestick formations, to track the price development. It is also very exciting when it is possible to follow whether the exchange rate is developing in the desired direction and it is possible to make a profit of several hundred Euros within a few minutes.

The free allocation of time during such an activity is also an advantage. The market participant decides for himself at what time he wants to start trading or when he wants to observe the market. Also the already mentioned fact that one can act up to few breaks, almost around the clock, is likewise helpful for the free time allocation. Thus, both the early riser and the night worker, who wants to work only from 23.00 or 24.00 clock, comes at his expense.

Also, a trade can last for as little as a minute or over several days. As a rule, however, the market participants stay between half an hour and six hours. In addition, the settings on the screens are structured in such a way that a clear and quick control of losses or profits is available. This is then an additional advantage for the client.

Automatic trading possible

A part of the customers would like to be live thereby, in order to follow the course development here. On the other side there are however also customers, who have neither the time nor desire to always follow the market live. Also here the foreign exchange trade offers a solution. Here the automatic trade comes then into play. With the help of modern trading systems as well as the tools available for it, there is the possibility that the customer trades automatically according to his own specifications.

Trade within seconds

The trading systems are active in seconds and some of them have a reaction time that a human does not have. Also, some of these split-second trades take place completely independently, without the customer being directly on the screen. Likewise, emotions play no role in this type of foreign exchange trading. Also with the solutions within seconds the customers can automate their own trading strategy and use the indicators available in a variety of executions.