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Module 1 – Lesson 5 – Why trade the Forex market

6. high profits
Due to the factor of gearing (to be explained later in this
guide) it is possible to take huge profits on trades

7. high liquidity
The Forex Market has an average trading volume of over
$1.5 trillion per day. It is the most liquid market in the
world. This means that a trader can enter or exit the
market at will in almost any market condition with
minimal execution risk.

8. low transaction cost
The cost to trade with most forex brokers is the spread.
This is the difference between the bid and the ask price.
Spreads in the forex market also tend to be much less (or
tighter) than the spreads applied to other securities such
as stocks. This makes OTC forex trading one of the most
cost-effective means of investment trading.

9. no commissions
Most dealers charge no commissions on trades.

10. uncorrelated to the stock market
A trade in the Forex Market involves selling or buying one
currency against another. There is limited correlation
between the foreign currency market and the stock
market. A bull market or a bear market for a currency is
defined in terms of the outlook for its relative value
against other currencies. If the outlook is positive, we
have a bull market in which a trader profits by buying that
currency against other currencies. Conversely, if the
outlook is pessimistic, we have a bear market for that
currency and traders may profit by selling the currency
against other currencies. In either case, there is always a
good trading opportunity for the trader.

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