Because of its global reach, the forex market has become a favorite of traders from professional money managers seeking to diversify their portfolios into a new asset class to individual retail speculators trying to make a profit.
The forex market is attractive to traders for many reasons. Because it trades virtually around the clock, it reacts instantaneously to geopolitical tensions, natural disasters, and economic reports.
“For some traders, abrupt price changes could be devastating if they trade the larger forex contracts,” says Jim Wyckoff, senior market analyst for TradingEducation.com. “Trading mini forex lots or mini currency futures contracts gives them much better leverage than they can get in stocks, where they must put up at least 50 percent of the purchase price, and with much less risk than they might have in the futures markets.”
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