There are still a couple of things to accomplish before you can trade in the world’s largest market known as Forex. There’s the matter of opening your Forex account and taking certain factors into consideration when opening an account.
Opening a Forex Account
Similar to the other markets, people who are interested in trading in the forex market must first set up an account and just like other markets, they type of account you open and the services provided differ from one another, so it is recommended that you find the one that best suites you.
So what is leverage? Leverage is what gives you the ability to control great amounts of capital by using little of your own capital. If an account has high leverage it is bound to be accompanied by higher levels of risk. An account’s amount of leverage greatly differs from one another but some accounts usually use a factor of 50:1 while some are higher as 250:1. Leverages that have a factor of 50:1 mean that for every dollar in your account gives you control of up to $50.
Leverage greatly benefits Forex trading because it allows you to earn large gains with only a small amount of investment. However, they can also be negative because trades can move against you because leverages are amplified by losses.
Commissions and Fees
Another benefit that separates the Forex market from its peers, trading in Forex accounts is done with a commission-free basis unlike the other markets, where in you pay a broker a certain fee for each trade. The reason why it is commission-free is because you are dealing with the market directly and are in no need of other parties like brokers.
Despite being commission-free, the Forex market still makes money through the trades you do. Each time you perform a trade, the spread is captured by the market makers.