Online Forex Trading

Written by Jacey Harmon
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Online forex trading is becoming a very popular trading option for investors. The currency market experiences the largest amount of activity of any market in the world. There are several reasons why forex trading is growing in size and popularity. As with any type of investing and trading there are risks and drawbacks to forex trading.

One of the main reasons why forex trading is becoming a popular option is because of the low costs involved. Forex traders pay no commissions or transaction fees for trades. Compared to nine to 100 dollars per equity, trade the low cost of forex trades is an attraction for traders. Since the currency market is the most active in the world competition among traders is prevalent. The competition creates tight spreads between bids and asks, ensuring that traders are likely to get the best price.

Those that are not risk averse can take advantage of the high leverage rates involved with forex trades. Currency traders can get 100:1 buying power, meaning you can buy 100 dollars with just a one dollar investment. Of course in order to take advantage of this you need a margin account. Margin accounts borrow money to cover the leverage. The borrowed money is charged interest that the trader must pay for.

Drawbacks to Online Forex Trading

One of the drawbacks to forex trading is the sheer amount of information to learn and analyze. Learning the many different economic and social factors that influence the currency markets can be a challenge. It is not impossible for an individual who is determined and has a strong passion for the market to succeed. There are services and resources available that can reduce the amount of research needed to develop a successful trading plan.

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