The Advantages of Forex Trading
Why would you want to trade Forex? Well there are a number of clear advantages compared with share or CFD trading that make it the most popular market among traders.
See below our list of benefits to Forex trading:
1. Profits are instant and tax free
When closing your trade any profit or loss is realised instantly in your account. There is no settlement period like share trading. Also, any profit is free from stamp duty or capital gains tax as per current UK tax laws.
If you are still not sure that Forex trading is for you then take a look at our other guides or try our demo account where you can test out trading for yourself in a risk free environment before investing your own money.*
2. 24 hours a Day Trading
Forex offers the ability to trade throughout the night from Sunday to Friday. A feature shared only with some indices.
3. Profits from a Falling Price
Forex can be bought or sold. If you believe a currency pair will drop in price you can open a sell trade and make gains from a falling market.
4. Quick price movement
Forex price movements are measured in pips, and therefore very small movements can result in large multiples of your stake e.g a 1% move in GBPUSD with a spot price of 16000 is 160 points. A stake of £5 could make a profit of £8000 (minus the spread) if you trade in the direction of the movement.
5. Trading Opportunities from Volatility
Forex is a global market and major events can result in significant movements in the related currency. Particularly in minor currencies. Therefore some traders are drawn to Forex because of the opportunity to make profits from event driven price movements
6. A Pure Market for Analysis
Forex is as close to a pure market as possible. There is no underlying exchange, there is no underlying company making autonomous decisions and prices are traded truly globally. Technical analyst enjoy the ability to apply models and trade from technical charting trigger points.
7. Increased Leverage
Forex trades off margin where the online trade company will request a percentage or margin factor of the overall value of the trade. Unlike shares where the full amount of the share value is required. Check our pricing pages for a full breakdown of 3DMarkets margin requirements
8. Competitive Spreads
Forex is the most popular market for online traders. This makes pricing among forex companies very competitive. 3DMarkets offers spreads from 0.8 on major currencies. For more information see our Forex comparison page.
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*Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.