When traders choose a market to trade on, they look for the optimum conditions and the best opportunity to profit from their trades. There are numerous reasons that lead investors around the world to identify these characteristics in the forex market and with our guide you will discover the nine main benefits of trading with forex:
Long and short positions
While you have the option of going short on many markets with derivatives, short selling or ‘short-selling’ is an inherent feature of forex trading. This is because forex trading consists of selling one currency (quoted currency) to buy another (base currency). The price of a currency cross is determined by the value of a single unit of the base currency compared to the quoted one http://abouttrading.pt
For example, in the GBP / EUR pair, GBP is the base currency, while EUR is the quote currency. If the GBP / EUR pair is trading at 1.12156, this means that 1 pound is worth 1.12156 euros. If you believe the pound will rise in value against the euro, you buy the pair (go long). If, on the other hand, you believe that the value of the pound will fall against the euro, sell the pair (go short). If your valuation turns out to be right, you make a profit, otherwise you incur a loss. This means that it is possible to make a profit regardless of the direction of the market.
The forex demand is open all the day, in a week, from 10am Sunday to the weekend. This is because forex transactions are made between the parties directly “over the counter” (OTC), rather than through a central exchange. And, being a large market on a global scale, you can always try to profit based on the different active market sessions based on the opening hours of the forex markets.
It is also important to mention the changes in trading hours that change in the months of March, April, October and November, due to the change in daylight saving time.
Is it possible to trade forex on the weekend?
The forex market closes on Friday evening at 23:00 (CET) and reopens at 22:00 (CET) on Sunday. However, as the market is closed only for retail traders (not central banks and other financial institutions), the forex market is therefore also open on weekends. As a result, there may be price differences between the closing price on Friday evening and the opening price on the following Sunday: this differential is known as the market gap.