15 Reasons Why You Should Trade Forex
By trading forex, investors can access a market that is far bigger in scope than that of the stock market.Because of its size, the forex offers better liquidity, which means that investors might be able to enjoy lower transaction costs and more easily enter and exit trades.
Forex is use as abbreviation for “foreign exchange”, and it is usually used to describe trading in the foreign exchange market by investors and speculators.
The Forex (Foreign Exchange) Market is the biggest market in the world. It is the market where currencies are trades.
Forex can be a good choice for active temporary traders. If you are interested in buy-and-hold, it’s probably best to look elsewhere.
These are the 15 reasons why forex trading is a great option for you.
1. The Forex market never sleeps
For example, when one major forex market closes, another one opens. FX trading is active and is done on a global scale in different business hours.
The major currencies can be traded 24 hours a day, five days a week – from 9pm Sunday to 10pm Friday (UK time).That’s because forex transactions are completed between parties directly, or over the counter (OTC).
As long as a single international bank is open, you are able to jump into the Forex waves! This gives you huge flexibility and control over your time.
Because of this flexibility, the finest forex traders normally spend just a few minutes looking at the charts for their entry points.
2. Size
The size of the Forex market is unprecedented and unmatched by any other worldwide market. The astronomic number of anywhere between 2 and 5 trillion dollars is what is estimated to be traded daily in the Forex market.
3. Low cost
You can start with a small account because most brokers let you size your trade in micro-lots or even single currency units.
While other investment options such as stocks, property, and commodities require you to have a lot of capital in order to start investing, you can literally start trading forex with as little as few dollars. There are very low barriers to entry for you to start trading.
For incoming orders, this warranties that the tightest bid/ask spread is selected at that time – minimizing your transaction prices.
4. High Liquidity
The liquidity of the Forex market has no equal.
Because of the participation of virtually any financial institution primarily central banks.
The FX market is the most liquid market in the world, meaning there are a large number of buyers and sellers that will always find a counterparty to perform the tasks they want.
High liquidity means that transactions can be completed quickly and easily, so the transaction costs – or spreads – are frequently very low.
5. Accessibility
The Forex market, as opposed to any other market, is open around the clock. No need to wait for this institution or the other to open. You can trade currencies from the comfort of your own home at any time during the day. This is something that makes Forex trading a simple and basic task for the retail trader.
6. Technology
Software advancements make our lives easier, and the same is true with online trading. There are more Forex trading platforms appearing every year, and there are even more regular updates for established Forex trading software.
The retail Forex software manufacturing is also enhanced by third party software providers who supply various add-ons and plug-ins for the most common trading platforms, including MetaTrader 4 and MetaTrader 5. This is why Forex is an innovative way to trade online.
7. Equality
This is a direct result of its size. As opposed to other markets, the Forex market is so enormous that it cannot be affected by one individual person or institution. So, the retail trader, for all intents and purposes, is on the same “level” as the largest bank when it comes to Forex trading. The Forex market cannot be manipulated.
8. Possibilities
You probably know that the simple rule of trading is to buy low and sell high. In Forex, you can also sell assets without owning them – this is known as going short.
With the help of leverage, you can trade much bigger amounts than your deposit. This is an advantage and a disadvantage at the same time, as your potential gain can be many times bigger than your deposit, but so can your potential loss.
9. Leverage
The Forex market has a very unique characteristic in terms of what it offers the simple trader. You do not need huge amounts of money to be able to trade huge amounts of currency. Almost all Forex brokers today offer a minimum of 100:1 leverage on your investment.
The main thing about leverage in forex is you don’t have to worry as long as you educate yourself in proper risk position management strategies.
The profit or loss you make will reflect the full value of the position at the point it is closed, so trading on margin offers an opportunity to make big profits from a relatively small investment.
However, your decision to leverage might be a double-edged sword. While you can potentially earn a bigger profit, you risk would naturally increase. Hence, you must be very clear on what you are doing.
The traders simply need to manage the leverage properly.
10. Volatility
The high volume of currency trades each day translates to billions of dollars every minute, which makes the price movements of some currencies very volatile.
Large volume transactions and high liquidity combined with fewer trading instruments generate greater intra-day volatility in the currency market that can be exploited by day-traders.
However, volatility is a double-edged sword – the market can fast turn against you, so it’s important to limit your exposure with risk-management tools.
Given that your broker will offer you leverage, there is typically enough movement in the market to allow short-term traders to make profit.
11. Profitability
Moreover, there is also another element that is exclusive to Forex.
The Forex market is a two-way market, which means you are always working with pairs. So if one currency is decreasing, that simply means another is increasing.
There is always the possibility to profit in the world of Forex.
12. Growth
It takes time to master Forex trading. But once you have, a whole new world of opportunities opens up for you.
You may have become an account manager and start getting profits not only from your trading, but also a commission for managing accounts.
13. Communities
Social networks become more and more popular every day, and as Forex is the biggest market, it also has the biggest amount of trading forums and trading networks.
As the retail market has been developing for nearly two decades, you can easily find lots of experts, contributors, educators, critics, and other members of the community in every possible language.
14. Conditions
Trading conditions are vital for professional day traders. Spreads and commissions on this market are quite low, making this an attractive market to trade.
Trading Forex is an exciting, interesting, and educational process. Not only does it give you an opportunity to make trades online, but it also educates you on worldwide events.
15. Focus on a currency pair position independently
FX costs reflect relative strength of two currencies respective economies.
In effect, each pair has its own “life”. So you only need to pay attention to what happens to your position on one pair instead of needing to follow multiple currency pair costs.
This makes trading a bit easier than equities. Remember that when it comes to a stock, you have to pay attention to dynamics about the company itself, to the company’s sector, and then to the overall market movement as well.
Conclusion
Forex is literally a moneymaker of opportunities for those who know how to trade like a professional. Furthermore, there is an ever-increasing likelihood that we will have to manage in these foreign exchange markets—in our personal or professional life.
Each and every row of the foreign exchange market has distinct advantages and disadvantages. Depending upon your priorities, you need to choose between the restrictions and limitations you can accept and those you cannot. It should go without saying that you cannot always get everything that you want.
If a forex trader really wants to take profitability to the next level, they should spend their time focusing on how best to identify these positions, and trade with an objective of capturing the price movement which they will, inevitably, cause.
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