- 08 Sep 2023, 16:06
#1773
Forex can be a good choice for active short-term traders. If you are interested in buy-and-hold, it's best to look elsewhere. The forex market offers:
- Simplicity: Compared to most alternatives, Forex is easy to understand (and easier to backtest and program if you are a systematic trader).
- Low starting cost: You can begin with a small account because most brokers let you size your trades in micro-lots or even single currency units.
- High liquidity: If you stick to the majors, you should get in and out with little slippage, provided you avoid the major news.
- Scalability: High liquidity means you can realistically scale and make large profits if your system works.
- Low costs: With a good broker, commissions are low compared to many other markets.
- Short-side trading: Unlike many markets, trading on the short side is just as profitable, increasing the profit opportunities.
- Volatility: Given that your broker will offer you leverage, there is usually enough movement in the market to enable short-term traders to profit.
- Market hours: Markets are open 24/5, so you can trade from anywhere in the world, and there are fewer risks with holding overnight positions.
- Free backtesting data: Swiss broker Dukascopy has offered free tick-level data over the past ten years. In other markets, historical data at this level of detail can be very expensive.