Top 6 Reasons to Trade Currency

Many investors are turning towards investing in the global currency markets, since the big slide in the U.S dollar took place in 2002. As this market is always open at some place or the other trading in these markets is a round-the-clock affair. There are a number of advantages that trading in these markets have. Some of them are discussed below. Read on:

1. Size of the market

The currency market can be considered as the largest financial market in the whole world. Everyday, nearly 2 trillion dollar is traded in this market. The liquidity of this huge market allows you to enter and exit your positions easily and without any difficulty. So you don’t need to worry about the price jumping too far before your trade is executed. Because of the large size of the market, it is difficult for any single group to come in and manipulate the market. This suggests that your analysis of demand and supply will probably be more accurate.

1. Easy entry

With an account as small as 250 dollars, you can get started in the currency market. In order to start making great returns on your investment, you don’t require having a lot of money. Anyone can take part in the currency market and take advantage of it.

1. Potential of profit

The potential of profit is what every trader wants to hear, and this market has a lot of it. It does not matter whether your currencies are going up or down, you can make money no matter what. All you have to do is to place your bets on a currency pair, if you see that it is going up. And, you have to sell it, when you see that the currency pair is going down. It is not that difficult.

1. Trading hours

The currency market is open 24 hours a day and 5 days a week. So, if you go to school during the day or work at night, you can still find time to trade currencies. Also, at different times throughout the day, different currencies are more active. So whenever you find time to trade, there is bound to be something that you can take advantage of.

1. Tax benefits

Presently, it is your current tax rate that the short-term capital gains are taxed at. And, at only 15%, your long-term capital gains are taxed at. Obviously, it is an advantage to pay less in taxes. In the foreign exchange market, it does not matter whether you are taking you profits two minutes after you enter a trade, or two months after you enter a trade. This is because, the first 40% of your profits will be taxed at short-term capital gains rates, and the remaining 60% will be taxed at long term capital gains rates.

1. No commissions

While trading currencies, you never have to pay a sales commission. You will be charged a commission by stock brokers and even discount stock brokers, for every trade you place – to get out of a position and also to get into a position.

So these are the advantages you will get if you trade currencies.