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New to FX - Why the Forex Market?

Why the Forex Market?

FX or Forex is the short name for Foreign Exchange. FX is one of the largest, the fastest growing and most liquid financial markets in the world.

According to the survey of the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity in April 2010 the Global foreign exchange market turnover was 20% higher in April 2010 than in April 2007, with average daily turnover of US $4.0 trillion compared to US $3.3 trillion. The increase was driven by the 48% growth in turnover of spot transactions. These are Fx trades that settle two working days after the deal date and which represent 37% of foreign exchange market turnover. Spot turnover rose to US$1.5 trillion in April 2010 from US $1.0 trillion in April 2007. Foreign exchange market activity is also becoming more global, with cross-border transactions representing 65% of trading activity in April 2010, while local transactions account for 35%. (source: Triennial Central Bank Survey)



ADVANTAGES IN TRADING ON THE FOREX MARKET

    » OPEN 24-HOURS A DAY

    Unlike most other trading markets, the FX market is open for trade 24 hours a day. Three major trading periods define the daily FX market, namely the Tokyo Trading Session, the London Trading Session, and the New York Trading Sessions. Generally, the FX market is most active when sessions overlap with a US/Europe overlap between 8 AM - 12 PM (New York Time) and a Europe/Asia overlap between 2 AM - 5 AM (New York Time).

    • New York Trading Session: 8:00 am - 5:00 pm (EDT) 15:30 AM – 22:02 PM (CET)
    • Tokyo Trading Session: 7:00 PM - 4:00 AM (EDT) 3:00 AM – 12.00 PM (CET)
    • London Trading Session: 3:00 AM - 12:00 PM (EDT) 8:00 AM - 16:30 PM (CET)
    • Frankfurt/Stuttgart trading session: 4:00 AM – 15:00 PM (EDT) 9:00 AM – 20:00 PM (CET)

    To learn more about market opening hours, please click here!

    London is the largest and most important trading centre in the world. Most of the world's largest banks have Fx trading operations in London and the bulk of the FX trading occurs during the London session.

    The second largest trading market is the New York market. The majority of the transactions in New York occur during the US/Europe overlap.

    » HIGH LEVEL OF LIQUIDITY

    Over USD 4 trillion is traded on a daily basis. Technology has now made this market accessible to almost anyone and retail traders have flocked to FX.

    » NO COMMISSIONS ON TRADING

    Providers (like LOYEX) generate their income by the bid/ask spread, meaning that there is no extra commission to pay if you trade even if the spread is only 1 single pip, or less.

    » HIGH LEVERAGE

    When we talk about leverage that means using other people's money to buy or sell contracts or securities on an exchange. Let us say there is a 1:20 leverage offered for you to trade. This means that your trading service provider is willing to allow you to borrow 20-times the amount of money that you put as deposit on your trading account to enter into a trade. So, if a contract is worth USD 20,000 and you were offered a leverage of 1:20, you will only need to have USD 1,000 on your account to purchase the contract worth USD 20,000. If the value of the contract goes to USD 22,000, the trader will make a profit of a USD 2,000. This would represent a return of 10% on the contract purchase price, but a return of 200% on equity.
    To learn more about leverage, please click here.

    Forex is the most liquid market making it very easy to get quickly into and out of a position. This happens because of the extreme amount of leverage which is common to the forex markets in the world.

    With LOYEX you can take advantage on the various amount of leverage offered to enter the FX market and you can specify a 1:1 leverage but you can request also a leverage of 1:500

    » PROFIT POTENTIAL ON RISING AND ALSO ON FALLING MARKET CONDITIONS

    In the FX market you are able to buy and sell any currency without limitation. If you enter the market you will be long on one currency and short on the other. A trader goes short / sells a currency if he anticipates the depreciation of the currency mentioned. A trader can also go long / buy a currency if the appreciation of the currency is expected. This gives the potential to sell and also buy currencies even in the same time on themarket and allows quick profit on 'bear' and also on 'bull' markets.

    » SPEED

    The forex market is a very fast paced market, majors are usually traded during the entire day, meaning there is no waiting for market openings or closing bells.