Investment Protection in highly leveraged FOREX accounts

The foreign exchange market is one of the most popular markets for speculation due to its enormous size, liquidity and tendency for currencies to move in strong trends. Presumably, these characteristics would enable traders to have tremendous success. However, success has been limited mainly for the reasons described below.

Many traders come with false expectations of the profit potential and lack the discipline required for trading. Short-term trading is not an amateur's game and is usually not the path for quick riches. Though currencies may seem exotic or less familiar than traditional markets (e.g., equities, futures, etc.), the rules of finance and simple logic are not suspended. One cannot hope to make extraordinary gains without taking extraordinary risks. A trading strategy that involves taking a high degree of risk means suffering inconsistent trading performance and often suffering large losses. Trading currencies is not easy (if it were, everyone would already be a millionaire), and many traders with years of experience still incur periodic losses. One must realize that trading takes time to master and there are absolutely no short cuts to this process.

The most enticing aspect of trading currencies or FOREX is the high degree of leverage used. Leverage seems very attractive to those who are expecting to turn small amounts of money into large amounts in a short period of time. However, leverage is a double-edged sword. Just because 1 lot ($100,000) of currency only requires $1,000 as a minimum margin deposit, it does not mean that a trader with $10,000 in his account should easily be able to trade 10 lots or even 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1,000 put up as margin. Most traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves (take a position that is too big for their portfolio), and as a consequence, often end up forced to exit a position at the wrong time.

If an account value is $10,000 and the trader places a trade for 1 lot, he is, in effect, leveraging himself 10 to 1, which is a very significant level of leverage. Most professional money managers are not allowed to leverage even this high. Trading in small increments on the account will allow the trader to endure many losing trades without experiencing large monetary losses.

If you, carefully, look and understand the following table you can easily guess that how hard you need to work just to protect your capital and, or investment amount ;)

+-----------+------------------+
| You Loose | You need to Earn |
+-----------+------------------+
|     1.00% |            1.01% |
+-----------+------------------+
|     2.00% |            2.04% |
+-----------+------------------+
|     5.00% |            5.26% |
+-----------+------------------+
|    10.00% |           11.11% |
+-----------+------------------+
|    25.00% |           33.33% |
+-----------+------------------+
|    50.00% |          100.00% |
+-----------+------------------+
|    75.00% |          300.00% |
+-----------+------------------+

Hence, in case you loose 75% of your capital you will need to earn 300% of the remaining amount in your account :(

The 5 Fatal Flaws and your FOREX Trading

Close to ninety percent of all traders lose money. The remaining ten percent somehow manage to either break even or even turn a trade into profit - and more importantly, do it consistently. How do they do that?

That's an age-old question. While there is no magic formula, EWI Senior Instructor Jeffrey Kennedy has identified five fundamental flaws that, in his opinion, stop most traders from being consistently successful. We don't claim to have found The Holy Grail of Trading here, but sometimes a single idea can change a person's life. Maybe you'll find one in Jeffrey's take on trading. We sincerely hope so.

The following is an excerpt form Jeffrey Kennedy's Trader's Classroom Collection. For more information from Jeffrey Kennedy on improving your trading, preview EWI's brand new service, Elliott Wave Junctures.

Why Do Traders Lose? If you've been trading for a long time, you no doubt have felt that a monstrous, invisible hand sometimes reaches into your trading account and takes out money. It doesn't seem to matter how many books you read, how many seminars you attend or how many hours you spend analyzing price charts, you just can't seem to prevent that invisible hand from depleting your trading account funds.

Which brings us to the question: Why do traders lose? Or maybe we should ask, "How do you stop the invisible Hand?" Whether you are a seasoned professional or just thinking about opening your first trading account, the ability to stop the Hand is proportional to how well you understand and overcome the Five Fatal Flaws of trading. For each fatal flaw represents a finger on the invisible hand that wreaks havoc with your trading account.

Fatal Flaw No. 1 - Lack of Methodology: If you aim to be a consistently successful trader, then you must have a defined trading methodology, which is simply a clear and concise way of looking at markets. Guessing or going by gut instinct won't work over the long run. If you don't have a defined trading methodology, then you don't have a way to know what constitutes a buy or sell signal. Moreover, you can't even consistently correctly identify the trend.

How to overcome this fatal flaw? Answer: Write down your methodology. Define in writing what your analytical tools are and, more importantly, how you use them. It doesn't matter whether you use the Wave Principle, Point and Figure charts, Stochastics, RSI or a combination of all of the above. What does matter is that you actually take the effort to define it (i.e., what constitutes a buy, a sell, your trailing stop and instructions on exiting a position). And the best hint I can give you regarding developing a defined trading methodology is this: If you can't fit it on the back of a business card, it's probably too complicated.

Fatal Flaw No. 2 - Lack of Discipline: When you have clearly outlined and identified your trading methodology, then you must have the discipline to follow your system. A Lack of Discipline in this regard is the second fatal flaw. If the way you view a price chart or evaluate a potential trade setup is different from how you did it a month ago, then you have either not identified your methodology or you lack the discipline to follow the methodology you have identified. The formula for success is to consistently apply a proven methodology. So the best advice I can give you to overcome a lack of discipline is to define a trading methodology that works best for you and follow it religiously.

Fatal Flaw No. 3 - Unrealistic Expectations: Between you and me, nothing makes me angrier than those commercials that say something like, "... $5,000 properly positioned in Natural Gas can give you returns of over $40,000 ..." Advertisements like this are a disservice to the financial industry as a whole and end up costing uneducated investors a lot more than $5,000. In addition, they help to create the third fatal flaw: Unrealistic Expectations.

Yes, it is possible to experience above-average returns trading your own account. However, it's difficult to do it without taking on above-average risk. So what is a realistic return to shoot for in your first year as a trader - 50%, 100%, 200%? Whoa, let's rein in those unrealistic expectations. In my opinion, the goal for every trader their first year out should be not to lose money. In other words, shoot for a 0% return your first year. If you can manage that, then in year two, try to beat the Dow or the S&P. These goals may not be flashy but they are realistic, and if you can learn to live with them - and achieve them -- you will fend off the Hand.

Fatal Flaw No. 4 - Lack of Patience: The fourth finger of the invisible hand that robs your trading account is Lack of Patience. I forget where, but I once read that markets trend only 20% of the time, and, from my experience, I would say that this is an accurate statement. So think about it, the other 80% of the time the markets are not trending in one clear direction.

That may explain why I believe that for any given time frame, there are only two or three really good trading opportunities. For example, if you're a long-term trader, there are typically only two or three compelling tradable moves in a market during any given year. Similarly, if you are a short-term trader, there are only two or three high-quality trade setups in a given week.

All too often, because trading is inherently exciting (and anything involving money usually is exciting), it's easy to feel like you're missing the party if you don't trade a lot. As a result, you start taking trade setups of lesser and lesser quality and begin to over-trade.

How do you overcome this lack of patience? The advice I have found to be most valuable is to remind yourself that every week, there is another trade-of-the-year. In other words, don't worry about missing an opportunity today, because there will be another one tomorrow, next week and next month ... I promise.

I remember a line from a movie (either Sergeant York with Gary Cooper or The Patriot with Mel Gibson) in which one character gives advice to another on how to shoot a rifle: "Aim small, miss small." I offer the same advice in this new context. To aim small requires patience. So be patient, and you'll miss small.

Fatal Flaw No. 5 - Lack of Money Management: The final fatal flaw to overcome as a trader is a Lack of Money Management, and this topic deserves more than just a few paragraphs, because money management encompasses risk/reward analysis, probability of success and failure, protective stops and so much more. Even so, I would like to address the subject of money management with a focus on risk as a function of portfolio size.

Now the big boys (i.e., the professional traders) tend to limit their risk on any given position to 1% - 3% of their portfolio. If we apply this rule to ourselves, then for every $5,000 we have in our trading account, we can risk only $50 - $150 on any given trade. Stocks might be a little different, but a $50 stop in Corn, which is one point, is simply too tight a stop, especially when the 10-day average trading range in Corn recently has been more than 10 points. A more plausible stop might be five points or 10, in which case, depending on what percentage of your total portfolio you want to risk, you would need an account size between $15,000 and $50,000.

Simply put, I believe that many traders begin to trade either under-funded or without sufficient capital in their trading account to trade the markets they choose to trade. And that doesn't even address the size that they trade (i.e., multiple contracts).

To overcome this fatal flaw, let me expand on the logic from the "aim small, miss small" movie line. If you have a small trading account, then trade small. You can accomplish this by trading fewer contracts, or trading e-mini contracts or even stocks. Bottom line, on your way to becoming a consistently successful trader, you must realize that one key is longevity. If your risk on any given position is relatively small, then you can weather the rough spots. Conversely, if you risk 25% of your portfolio on each trade, after four consecutive losers, you're out all together.

Break the Hand's Grip; Trading successfully is not easy; it's hard work... damn hard, indeed. And if anyone leads you to believe otherwise, run the other way, and fast. But this hard work can be rewarding, above-average gains are possible and the sense of satisfaction one feels after a few nice trades is absolutely priceless. To get to that point, though, you must first break the fingers of the Hand that is holding you back and stealing money from your trading account. I can guarantee that if you attend to the five fatal flaws I've outlined, you won't be caught red-handed stealing from your own account.

Does a Perfect FOREX Trading System actually exists?

Almost all, Forex forums are full of newbies asking about the best trading system or strategy and how they can start earning lots of money from Forex, but they're usually brought back down to earth by more experienced forum members -- because there is no such thing as the perfect Forex trading system; unfortunately.

On these same forums you will often read about latest and greatest Forex systems or strategies, but almost all of these systems or trading robots eventually end up failing, despite initially looking profitable. It's the same story with many of the commercial or free systems available online. They all have very impressive track records and look like highly successful systems on their sales page, but when you come to buy them, you quickly discover that they aren't anywhere near as profitable as they claim to be. This is hardly surprising of course because if these systems were so profitable then they wouldn't want to sell them to the general public. Shouldn't the amateur and, or so called expert traders be aware of the fact that not only a few, talented or select people around the world are trying to build a perfect Automated/Algorithmic Trading System or Trading Robot, but 100s of 1000s of expert traders and programmers are geared to do so since the day general purpose computers were introduced to the public. Big-wigged organizations like as Google, Yahoo, Reuters, Microsoft, A&T, most of the banks, hedge-funds and other such money or funds management companies engaged fleets of experts or renowned programmers who I'm sure are working day and night to build an excellent trading system of their own, but the million dollar question is -- did they succeed till today?

Likewise, many a people, channels, magazines and, or companies all over world are selling tips for trading, but why? Do these really work for them? If yes, why don't they trade themselves using their tips and, or such a result oriented research, analysis and strategies?

Please don't buy and, or try, we are not endorsing these, but do explore the following sites:

• www.AutoTradeFusion.com
• www.ElliotWave.com
• www.FAPTrubo.com
• www.FXMoneyMap.co.uk
• www.ForexRebellion.com
• www.MaxEDD.com
• www.MegaDroid.com

On the other hand, I repeat -- why the hell anyone will sell such a predominating system, if it works well for him/her and is generating huge amounts of money by investing a very small capital?

Believe it or not, but the fact is that there exists no such thing as a perfect system, strategy and, or combinations of indicators. There, however, are lots of systems that are capable of making a profit in the long-run, but even the very best systems will go through low periods and incur some losses in the short-term -- means almost all indicators fail at one or other time-frame or period.

Unfortunately, there is no fast and easy way to learn trading. Pretend for a moment that you don’t know how to cook. You sign up for a cooking class that will consist of 15 sessions of three hours each, or 45 hours. By the end of that time, you will know how to do more than boil water, but you will not be qualified to solicit capital from investors and open a restaurant.

Forecasting foreign exchange rates is notoriously difficult. Economists don’t have a standard model of what determines exchange rates, and even the most brilliant and closely-reasoned forecast can run off the tracks as events unfold. But multinational corporations, FOREX traders and global fund managers must have forecasts in order to select foreign activity priorities and to protect against catastrophic loss.

The key to being successful is to develop a simple system or strategy where the odds are in your favor for every single trade you make. This can be achieved by combining certain technical indicators so that you only enter positions where all your chosen indicators point in the same direction and your system also helps you in filtering out fake signals, so you can be confident in entering into a long or short position.

You don't necessarily need to trade a system with a high success ratio either. You can make decent money from Forex trading just by developing a system with a 70-80% win ratio, for instance, if you have a solid stop-loss policy and let your winning positions run -- that is your system is also capable of risk and, or money management techniques and is dynamic enough to absorb market fluctuations and, or spikes before or during release of economical data.

It basically comes down to probabilities. If you have probability on your side for every trade you make then there's no reason why you shouldn't make money from Forex trading. You don't need to constantly be on the lookout for a latest and greatest trading system. It's very often the simple tried and tested systems or strategies that are the most profitable in the long run.

Hence, the best or perfect strategy or system is which is simple, works for you, works on all time-frames and or all instruments.

Do back-test your system on all time-frames using reliable historical data for the past 2-3 years and over live data for next 2-3 months using a DEMO account before you bet your real money.

Things to know, the Brokers won't tell you

Transaction Costs: Brokers make their money by charging you a routing fee or by padding the spread, plain and simple. They may claim they have commission-free trading, but they pad their spreads excessively or their “low or no commissions” may not really be that low. Make sure you are honestly doing your homework here. Compare transaction costs, then compare them some more.

Try finding or negotiating for lower commissions on volume you trade per month or on initial deposit, balance of equity in your account; A good enough broker should not play tricks with your hard earned money and, or your efforts to earn from your investments.

Execution: Some brokers are deal desks that make money in the spread. Others route your orders to a single bank preventing best execution. Yet others claim to let customers trade with each other, but don’t allow you to post your Limits for others to see. How does one know what’s real?
A good enough broker provides liquidity by routing orders directly to an Electronic Communication Network [ECN] or other suitable network comprising of multiple banks, hedge funds and, or market makers -- the trading in FOREX indeed is decentralized; execution should not be controlled by the brokers and, or anyone else.

Trading Tools: Some brokers lock you into one trading platform with only a few order types. Some don’t allow you to connect with the services and tools you want or need to be a better trader. For example you can open multiple positions using a most popular, though a totally tush Metatrader 4, terminal, but you can't merge these positions. You can't hedge positions in many a popular platforms including the latest Metatrader 5.

A good enough broker doesn't handcuff your trading by limiting your trading tools or enforcing a certain proprietary system, but allows third party developers by offering an Application Programming Interface [API] and, or even a Software Development Kit [SDK] based on open standards and, or common protocols.

Security: Can you point to Cyprus on a map? Do you know who is regulating traders in that third world country promising unbelievable leverage? Before you place your hard earned money with a broker, you should make sure it’s going to, well-regulated market, not a country where trading is still a bit of a Wild West show.

Good enough brokers operate from reputed countries and are regulated by government appointed authorities or industry standard associations, organizations known for stringent rules and regulations, which most other countries use as their guide. We take additional measures, such as Redundant and Automated Manually Observed Risk Management systems, to ensure you can trade with trust and security.

Price Improvements: Other brokers may tout their price improvements as a reason to give them a try. But look closer and you may see that their “price improvement” is just the market fluctuating naturally. That is not a price improvement.

A price improvement at a good enough broker means that the market was 10 when you wanted to buy and you got filled at 9. That is a true price improvement.

Fill Speed: Some FOREX brokers make some pretty outrageous claims about fill speed—beware of what they say! If they talk about fill speed in seconds, run away.

Good enough brokers route your orders directly to liquidity providers, except for the orders settled internally or locally, or other customers in milliseconds, not seconds. Their cancel speed (sometimes more important than fill speed) is even faster than their order processing speed, something every trader can appreciate.

Spreads: Don’t be fooled by claims from brokers implying spreads can be smaller than the minimum price difference (sometimes down to zero!). They are falsehoods. Make sure you are reading the fine print.

Better watch their claims regularly for a few months or more; can't wait -- ask for a tick data for the past year and analyze it carefully ;)

Trust: Trust in your broker is crucial. Whether it is transparent trading, non-deal desk execution, or ethical conduct, your broker should have your back. Sadly, this isn’t always the case. Research the NFA and CFTC or other relevant records. Some brokers have racked up millions in fines... and are still operating.

The best brokers are focused on you, the trader, and not the market price. They must work tirelessly to provide you a true trading environment, system and, or platform to give you the cost effective and transparent way to trade FOREX.

Nothing is perfect, not even the God in this world! However, the records at regulator's registers must show little or no complaints about good enough brokers or should show quick and satisfactory replies as well as solutions. Same is applicable for their publicly open bug tracking system.

Limiting your Risks while trading the FOREX

FOREX trading can be risky, but there are ways to limit risk and financial exposure. Every FOREX trader should have a trading strategy -– knowing when to enter and exit the market and what kind of movements to expect. Developing strategies requires education -- the key to limiting risk in FOREX. At all times follow the basic rule: Do not place money in the FOREX that you cannot afford to lose. Means, learn and master the money management; set your targets according to your risk appetite.

Every FOREX trader needs to know at least the basics about technical analysis and how to read financial charts. He should study chart movements and indicators and understand how charts are interpreted. There is a vast amount of information on FOREX trading available both on the Internet and in print. If you want to be successful at FOREX, know what you are doing.

Even the most knowledgeable traders, however, can't predict with absolute certainty how the market will behave. For this reason, every FOREX transaction should take advantage of available tools designed to minimize loss. Stop-loss orders are the most common ways of minimizing risk when placing an entry order. A stop-loss order contains instructions to exit your position if the currency price reaches a certain point. If you take a long position (expecting the price to rise) you would place a stop loss order below current market price. If you take a short position (expecting the price to fall) you would place a stop loss order above current market price.

As an example, if you take a short position on USD/CAD it means you expect the US dollar to fall against the Canadian dollar. The quote is USD/CAD 1.02138/40 -- you can sell US$1 for CA$1.0238 dollars or sell CA$1.0240 for US$1.

You place an order like this:
   Sell USD/CAD: 1 standard lot USD/CAD @ 1.0238 = CA$102,380
   Pip Value: 1 pip = US$10
   Stop-Loss: 1.0248
   Margin: US$1,000 (1%)

You are selling US$100,000 and buying CA$102,380. Your stop loss order will be executed if the dollar goes above 1.0248, in which case you will lose US$100 (or a slightly more due to slippage).

However, USD/CAD falls to 1.0218/20. You can now sell US$1 for CA$1.0218 or sell CA$1.0220 for US$1.

Because you entered the transaction by selling US dollars (buying short), you must now buy back the US dollars and sell CAD dollars to realize your profit.

You buy back US$100,000 at the current USD/CAD rate of 1.0220 for a cost of CA$102,220. Since you originally sold them for CA$102,380 you made a profit of $160 Canadian dollars or US$156.55 (160 divided by the current exchange rate of 1.0220), less commissions if any.

Final rule of thumb is: Explore, learn and, or practice using a DEMO account as much as you can before placing any bids with your real money -- Is better either you seek advice from an Independent Investment Adviser, partner and, or with an Investment Management Consultant.

Please note that nothing ventured is nothing gained and that success and riches never come easy or on a platter of gold and this is the one truth I have learned from trading for our private banking clients.

Beware of the Risks involved in trading FOREX on-line

Every business has risks and the currency trading is not an exception, here instead, are a few inherent risks which all traders should not only be well aware of but must take care appropriately.

Despite the claims you may see on some FOREX web sites, the FOREX market is not risk-free. You are trading with substantial sums of money and there is always a possibility that trades will go against you. There, however, are several trading tools that can minimize your risk, and with caution, and above all education, the FOREX trader can learn how to trade profitably and while minimizing losses.

 

Scams

FOREX scams were fairly common a few years ago. The industry has cleaned up considerably since then, but you still need to exercise caution when signing up with a FOREX broker. Do some background checking – reputable FOREX brokers will be associated with large financial institutions like banks or insurance companies and they will be registered with the proper government agencies. In the United States brokers should be registered with the Commodities Futures Trading Commission (CFTC), Financial Industry Regulatory Authority (FINRA) or a member of the National Futures Association (NFA).

Whereas, in the Europe users need to check with various regulators depending from where a broker is operating, Financial Services Authority (FSA) for UK, (BAFIN) for Germany and other European Competent Authorities in the Netherlands, Hungary, Spain, Luxembourg, France, Poland. The resident of other countries must/can check with their local Consumer Protection Bureau, the Better Business Bureau or appropriate Regulatory Authorities.

• Investment opportunities 'too good to be true': Stay away from Forex trading opportunities that claim to make you rich overnight. Do not use your hard-earned savings or your retirement fund, or resort to mortgaging your house, to invest in these types of schemes. Chances are that you may never get your money back.
• Guaranteed profits or claims of unusually high performance: Anybody claiming to give you a regular 30% or 40% return per month is promising something that cannot be delivered. These claims of massive profits are likely to be false and are basically tactics to lure in your money.
• Downplaying of the risks involved with currency trading: Always be wary of statements claiming that a company or individual will recover your loses or that your investment will remain safe. Forex trading involves a high amount of risk, and you may end up losing all or part of your investment.
• Difficulty obtaining background information: Don't deal with anyone who won't readily give you their background information.
• Remittance of monies to a third party: An investor willing to use broker's trading system to trade his monies himself or by way of a money manager or third party must deposit his monies in an account opened in the investor's name with the broker or with one of its Partner Custodian Banks. Alternatively, the investor can ask his bank to issue a bank guarantee in favour of the broker. There is no other possible way.

 

Risks

Assuming you are dealing with a reputable broker, there are still risks to FOREX trading. Transactions are still subject to unexpected rate changes, volatile markets and political events.

Break-Down Risk - is probability of a failure in the system, it can happen when one may not be able to enter new orders, execute running orders, or alter or cancel orders that were entered before. The result of such a failure may be a loss of orders or order priority.

Exchange Rate Risk – refers to the fluctuations in currency prices over a trading period. Prices can fall rapidly resulting in substantial losses unless stop loss orders are used when trading FOREX. Stop loss orders specify that the open position should be closed if currency prices pass a predetermined level. Stop loss orders can be used in conjunction with limit orders to automate FOREX trading – limit orders specify an open position should be closed at a specified profit target.

Interest Rate Risk – can result from discrepancies between the interest rates in the two countries represented by the currency pair in a FOREX quote. This discrepancy can result in variations from the expected profit or loss of a particular FOREX transaction.

Credit Risk – is the possibility that one party in a FOREX transaction may not honor their debt when the deal is closed. This may happen when a bank or financial institution declares insolvency. Credit risk is minimized by dealing on regulated exchanges which require members to be monitored for credit worthiness.

Country Risk – is associated with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with 'exotic' currencies than with major currencies that allow the free trading of their currency.

 

Conclusion

Explore, learn and, or practice using a DEMO account as much as you can before placing any bids with your real money -- Is better either you seek advice from an Independent Investment Adviser,  partner and, or with a reliable Investment Management Consultant.

Why Trading FOREX is Better Option?

Online FOREX trading has become very popular in the past decade because it offers traders several advantages.

It's simple: Unlike the stocks and, or derivatives, you need not analyze, scan and watch hundreds or thousands of instruments; stick to 4--6 most popular currency pairs or just EUR/USD and leave the fundamental analysis to experts; most of the brokers or reporters publish these as news and, or real-time economic calender.

Low barriers to entry: You would think that getting started as a currency trader would cost a ton of money. The fact is, when compared to trading stocks, options or futures, it doesn't. Online FOREX brokers offer "mini" and "micro" trading accounts, some with a minimum account deposit of $100 or even lower as well. We however, do not recommend trading with that small an equity.

FOREX never sleeps: Trading goes on all around the world during different countries’ business hours. You can, therefore, trade major currencies any time, 24 hours per day. Since there are no set exchange hours, it means that there is also something happening at almost any time of the day or night.

No middlemen: Spot currency trading eliminates the middlemen and allows you to trade directly with the market responsible for the pricing on a particular currency pair; the FOREX market is totally decentralized.

No fixed lot size: In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5,000 ounces. In spot FOREX, you determine your own lot, or position size. This allows traders to participate with small accounts or little equity per trade.

Go long or short: Unlike many other financial markets, where it can be difficult to sell short, there are no limitations on shorting currencies. If you think a currency will go up, buy it. If you think it will fall, sell it. This means there is no such thing as a “bear market” in FOREX you can make (or lose) money any time.

Low trading costs: Most FOREX accounts trade without a commission and there are no expensive exchange fees or data licenses. The cost of trading is the spread between the buy price and the sell price, which is always displayed on your trading screen. Some FOREX brokers, however, also charge additional commissions which can rob of your hard-earned money quite quickly.

Unmatched liquidity: Because FOREX is a $4 trillion a day market, with most trading concentrated in only a few currencies, there are always a lot of people trading. This makes it typically very easy to get in to and out of trades at any time, even in large sizes.

It's immeasurable: The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank or the mighty Chuck Norris himself) can control the market price for an extended period of time.

Available leverage: Because of the deep liquidity available in the FOREX market, you can trade FOREX with considerable leverage (up to 500:1). This can allow you to take advantage of even the smallest moves in the market. Leverage is a double-edged sword, of course, as it can significantly increase your losses as well as your gains.

Free stuff everywhere!: Most online FOREX brokers offer "demo" accounts to practice trading and build your skills, along with real-time FOREX news and charting services. And guess what? They're all free! Demo accounts are very valuable resources for those who are "financially hampered" and would like to hone their trading skills with "play money" before opening a live trading account and risking real money.

International exposure: As the world becomes more and more global, investors hunt for opportunities anywhere they can. If you want to take a broad opinion and invest in another country (or sell it short!), FOREX is an easy way to gain exposure while avoiding vagaries such as foreign securities laws and financial statements in other languages.

In addition to above, there are a few more reasons and, or considerable facts though somewhat tenuous:

You need not count: The currencies are traded electronically, there is no need to count and re-count or transport the notes and no fear of getting or accumulating any kinds of fake bills.

The "peace of mind": Since we need not interact with the buyers and, or sellers and there would be no returns of the goods and, or refunds of the money in this FOREX or financial market trading.