Why Do Forex Exchanges?


Why Do Forex Exchanges

Why do we exchange Forex?

There is a distinction between investing and trading. To clarify this, I'll use the words of Al Thomas, the president of Williams Investments, who wrote, "If it doesn't go upwards, don't invest in this." He added, "Anyone who invests may be a trader, but the basic measure differs." That was one of the principles I took seriously following my loss in the securities market in 2000.

The features of currency trading are comparable to the commodity and stock markets.


The forex market is the most liquid in the world, with more than $1.9 trillion of transactions per day. The volume of trades on the commodities markets is equivalent to 444 billion dollars per day, and the amount of trade in the US securities market is around 200 billion dollars daily. This helps ensure the smoothest execution of trades and stops market manipulation. This also facilitates trading.

Trading Times

The forex market is accessible every day of the week (excluding weekends), meaning that it is open in the US at 3:00 pm on Sundays (EST) and closes at the time of 5:00 (EST), which permits traders to select the time of trading that is best for their trading needs. 

Commodity trading hours change depending on the commodities being traded. This includes extended trading hours; US markets for securities can be conducted between 8:30 am and 6:30 pm (EST) on days off.


Based on the size of the forex account, the leverage can range from 1:100 to 1:100. However, some forex brokers provide up to 1:400 (I would never advocate such leverage). The leverage in the stock exchange may be as high as 1:14, and in the commodity markets, the leverage can vary depending on the commodity traded. However, it should be quite high. 

Because the commodity market does not have the same liquidity as the Forex market, the leverages are often extremely risky. Though I've never had to close the exchange of commodities with a maximum daily amount, this anxiety has always been in my head.

Trade Costs

The costs of transactions in the forex market comprise the difference between buying and losing every currency. There aren't any brokerage charges. There are transaction charges and brokerage fees in the stock and commodity markets. If you're using discounted brokers, these charges are added. 

Minimum investment - you'll be eligible to open a foreign trading account for around $300, whereas it will cost me 5000 to establish an account for trading in the future.


Seven major currencies back the majority of forex transactions. Within the US exchange alone, there are 4000 shares. There are more than 200 commodity markets. Even though they're not many, they aren't all that few. 

Many of them are liquid and are thus only traded by hedge fund managers. As you'll realize, the smaller the financial assets that exist, the less chance there is to study each one more carefully.

Trade Execution - in the forex market, the trade execution is almost instantaneous. You are relying on the broker to execute your trades in the commodity and stock markets. Consequently, the outcomes can be inconsistent.

These advantages make forex trading appealing, even though it requires a lot of dedication, education, discipline and perseverance. Risks define all kinds of trading.

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