Why Forex Currency Trading Is Booming In Australia
Australia, being one of the best controlled financial sectors in the world, has become an international hub for forex trading. Australian residents benefit from the numerous forex brokers and trading experts to invest their money in the market and make a good profit. The Forex market has materialized as one of the largest financial markets in Australia and the world due to its easy liquidity, accessibility, international nature, and more. Because there is no physical exchange involved in forex trade, people can buy and sell trade currencies over the counter for a significant profit.
The Foreign Exchange Market Is Global and Expansive
The forex market is a truly large place as it involves traders and investors participating from different parts of the world. Its magnificence is evident from the fact that traders exchange over 4 trillion dollars in the form of trade currencies every day. The market’s sheer size is its advantage as it enables lucrative global trading involving the finances of multiple countries.
It is Beginner-friendly
A forex market is a significant place for first-time traders looking to make small investments. Thousands of Australian residents begin their forex investment journey every year. Trusted brokers and forex trading companies offer to provide demo accounts for beginners to practice on and get an understanding of the market. Using these accounts, rookie traders can also test their knowledge about trading and fine-tune their skills using the market simulation before making real investments.
The Market Works Round the Clock
As the foreign exchange market is global and always active in some parts of the world, trading takes place continuously during the week. It operates for 24 hours and five days a week. The first market opens at 5 pm on Sunday in Sydney, Australia, and it closes along with the New York market at 5 pm on Fridays.
It Is a Liquid Market
Liquidity is a term used in the financial market referring to the trading ability of assets without affecting their value. As foreign currency trading occurs round the clock, it leads to a large volume of trading in the forex market at any time of the day or the week. This feature enhances the liquidity of trade currencies. Therefore, forex markets are great platforms for retail traders to invest with minimal risks.
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It Allows Directional Trading
The Australian dollar is the second most popular traded currency. The forex market allows directional trading and does not have any restrictions on the activity, unlike the stock market. As the trading is continuous in this market, traders have the option of going long or selling short at any time, depending on their prediction of shifts in the value. The transaction fee that retail traders need to pay the brokers is not as high as the stock market due to the increased liquidity of trade currencies.
No Single Player is Controlling the Market
As it is a global market, forex trading involves a large number of participants from all over the world. Therefore, no one person, company or country controls the market. The performance largely depends on external factors like geopolitics, global economic stability, trade deals, developments, natural calamities and more. But these forces also make the market volatile. When all the determinants are at an optimum, traders can make significant profits. Otherwise, there is a risk of loss.
Low Transaction Fees
Unlike the stock market, mutual funds or gold bonds, online forex trading requires a small capital investment. It does not charge major transaction fees because of its liquidity. The transaction charge mainly comprises the broker’s fee. But as they earn significantly well from the spreads, i.e., the difference between the bid and the asking price measured in points in percentage (pips), they charge minimal fees. It is therefore highly beneficial for first-time and seasoned traders.
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