•     Potential profit in falling markets
•     No commissions or exchange fees
•     Your money works harder with up to 100 to 1 leverage
•     News which is bad for equities may be good for Forex
•     Diversification of currencies not offered by other market investments
•     Perfect for technical traders
•     Investment is in countries, not in corporations
•     Forex can be traded 24 hours a day, 5 days a week
•     Protection from market manipulation



Potential profit in falling markets

A Forex trade always involves the sale of one currency to buy another, so, depending on which currency is being bought and which is being sold, a trader always has an opportunity to profit regardless of which way the market is moving. While more than half the exchanges around the world impose stringent constraints on short-selling of equities, this is not an issue for Forex trades.

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No commission or exchange fees

Two costs of equity trading are commission and spreads (the difference between the bid/buy and offer/sell price at a point in time) which may vary dependant on various circumstances (such as whether a trade is happening “after hours”). Spreads for different currency pairs are generally fixed and do not change with market movement. There are no commission or clearing fees payable for trading currencies online, although there may be fees for additional services.

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Your money works harder with up to 100 to 1 leverage

Your margin is the amount of collateral required for you to take on a trade. It allows traders to take on leveraged positions with a fraction of the full equity necessary to fund the trade. In the equities markets the margins required are usually higher. The margin in a Forex account may be set as low as 1%, effectively allowing leverage up to 100 to 1, or control of $100,000 in currencies for every $1,000 as margin.

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News which is bad for equities may be good for Forex

Forex is effectively an investment in events happening at a macro level in a country and the way that money flows according to changes. Events in a country may be bad news for equity markets, but strengthen that country’s currency. An example of this is interest rates. When rates go up the equities usually weaken as investors shift their money out of the stock market, and when rates go down the opposite occurs. However hikes in interest rates traditionally strengthen a country’s currency, with investors shifting assets to that country to gain higher returns.

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Diversification of currencies not offered by other market investments

Prudent investors often wish to diversify some of their holdings in a range of currencies. Most banks do not offer foreign currency accounts and Forex is one way for investors to control currency they believe will rise in the future.

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Perfect for technical traders

Supposedly, around 85% of all Forex trading is investment or speculative in nature and movements in the market frequently overshoot before correcting themselves. Unlike equity markets, the difference between high and low prices of a currency pair in a given day is usually significant, particularly with high leveraging, and strong trends develop. Investors skilled in studying price movements and predicting patterns and trends may be able to identify these breakouts and profit from them.

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Investment is in countries, not in corporations

Currency prices reflect the financial health of an economy, while equity prices may encompass the performance of an individual company, trends in the market the company is in and/or overall bullish/bearish trends in the stock market. Economies can be analysed much like individual companies, with overall health indicated by growth rates and balance of trade. The data which is used to gauge the economic health of an economy is readily available and includes GDP, foreign investment, international trade balance and interest rates.

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Forex can be traded 24 hours a day, 5 days a week

Unlike other financial markets, Forex is a 24-hour market and investors can respond to news and events by trading at any time they occur. The market is open from Sunday 17:00 EST (5:00PM New York), to Friday 16:00 EST (4:00PM New York).

Please note: MFGtrader trading hours are from Sunday 17:10 EST (5:10PM New York time), to Friday 16:00 EST (4:00PM New York time).

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Protection from market manipulation

With around US$2 trillion being traded every day, the enormous size of the Forex market makes it almost impossible for traders to manipulate the market. Even the central monetary authorities of countries are not in a position to manipulate the price of their currencies, and even when they do become involved in the market, their involvement is restricted by stringent monetary regulations.

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